WASHINGTON (Reuters) - A closely watched gauge of U.S. jobless benefits hit a two-year low last week and factory activity in the country’s Mid-Atlantic region accelerated in November, suggesting the economy’s recovery was gaining speed.
The improving economic picture was further bolstered by a third report showing a measure of future economic activity increased 0.5 percent in October.
While the set of data is the latest to show the economy shaking off a summer slowdown, it is unlikely to deter the Federal Reserve from fully implementing a plan to buy $600 billion of U.S. government debt to stimulate growth.
“The economy experienced some weakness earlier, but things are looking better now,” said Gus Faucher, director of macroeconomics at Moody’s Analytics in West Chester, Pennsylvania.
New claims for state unemployment benefits rose a slight 2,000 to 439,000 last week. However, a four-week moving average -- a better gauge of underlying labor rends -- hit the lowest level since September 2008, the Labor Department said.
MID-ATLANTIC FACTORY ACTIVITY SOARS
In a separate report, the Philadelphia Federal Reserve Bank said its business activity index soared to 22.5 this month -- the highest since December -- from 1.0 in October.
A reading above zero indicates expansion in the region’s manufacturing. Analysts had looked for a reading of only 5.0.
The data combined with General Motors’ = strong stock market debut and fading fears over Ireland’s debt woes to give U.S. stocks solid gains for the first time this week.
Prices for U.S. government debt fell and benchmark yields approached three-month highs touched this week. The dollar dropped against the euro, but rose versus the yen.
Though data so far suggests the economy regained some strength as the fourth quarter started, the pace of the recovery from the worst recession since the 1930s remains too slow to dent a 9.6 percent unemployment rate.
Economists said stubbornly high unemployment and very low inflation should help the U.S. central bank weather widespread criticism of its decision to ease monetary policy further. A report on Wednesday showed core consumer inflation in October was the lowest since records started 53 years ago.
“I am inclined to believe they will continue (with the full bond-buying program). They are not worried about inflation in the near-term and they are right not to,” said David Wyss, chief economist at Standard & Poor’s in New York.
Two Fed officials on Thursday, including Minneapolis Fed President Narayana Kocherlakota -- who had been skeptical of the benefits of further monetary easing -- endorsed the central bank’s November 3 decision.
The claims data covered the survey week for the government’s employment report for November. Though claims have been too volatile to provide a good prediction of nonfarm payrolls, economists expect employment to expand again in November.
Last month, employers added jobs for the first time since May. The improving labor market trend was also highlighted in the Philadelphia Fed survey, which showed an employment index at its highest since August 2007.
The survey, which closely correlates to Institute for Supply Management’s report on national manufacturing due early next month, suggested an unexpected drop in a gauge of New York state factory activity may have given a false signal.
The claims data showed the number of people still receiving benefits under regular state programs after an initial week of aid held at a two-year low of 4.30 million in the week ended November 6.
However, taking all programs into account, a total of 8.85 million people were claiming benefits during the October 30 week, the latest for which data is available.
About 800,000 people could lose their emergency benefits when they expire on November 30, unless Congress renews them, and a total of two million would lose them by the end of December.