RPT-WRAPUP 4-US factory,jobless data show some economic strength

Thu Nov 18, 2010 3:48pm EST

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 (Repeating to additional subscribers)
 * Jobless claims rise only 2,000 last week
 * Four-week moving average lowest in more than two years
 * Mid-Atlantic factory activity highest since December
 * Leading economic index rises 0.5 percent
 (Adds comments from Fed officials, updates markets)
 By Lucia Mutikani
 WASHINGTON, Nov 18 (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 on Thursday 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,
 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.
  For a graphic on U.S. jobless claims, click on:
 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' (GM.N) 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 Nov. 3 decision. For details see [ID:nN1896184]
 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
 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
Nov. 6.
 However, taking all programs into account, a total of 8.85
million people were claiming benefits during the Oct. 30 week,
the latest for which data is available.
 About 800,000 people could lose their emergency benefits
when they expire on Nov. 30, unless Congress renews them, and a
total of two million would lose them by the end of December.
For analysis, see [ID:nN12142872]
  (Additional reporting by Glenn Somerville in Washington and
Leah Schnurr in New York; Editing by Neil Stempleman)

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