WRAPUP 4-U.S. jobs, factory data point to slowing economy

Thu Apr 18, 2013 4:52pm EDT

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* Weekly jobless claims rise 4,000
    * Four-week average increases 2,750
    * Claims show no deterioration in labor market conditions
    * Mid-Atlantic factory activity slows in April

    By Lucia Mutikani
    WASHINGTON, April 18 (Reuters) - The number of Americans
filing new claims for unemployment benefits rose last week and
factory activity in the nation's Mid-Atlantic region cooled in
April, further signs of a moderation in economic growth.
    Underscoring the softening growth outlook, another report on
Thursday showed a gauge of future economic activity fell in
March for the first time in seven months. They were the latest
data to indicate a step-back in the economy after a brisk start
to the year as tighter fiscal policy began to weigh.
    "The evidence is mounting that the economy lost momentum in
March and that has carried to April," said Ryan Sweet, a senior
economist at Moody's Analytics in West Chester, Pennsylvania.
    Economic data for January and February suggested that growth
accelerated in the first quarter after activity almost stalled
in the final three months of 2012.
    But in a replay of the prior two years, the economy appeared
 to have hit a speed bump at the end of the quarter, with data
ranging from employment to retail sales and manufacturing
weakening significantly in March.
    Initial claims for state unemployment benefits rose 4,000 to
a seasonally adjusted 352,000, the Labor Department said. The
four-week moving average for new claims, a better measure of
labor market trends, rose 2,750 to 361,250.
    While claims rose last week, they were still at levels
economists normally associate with average monthly job gains of
more than 150,000. That helped ease concerns of a deterioration
in labor market conditions after an increase in nonfarm payrolls
in March was the smallest in nine months.
    "Labor market conditions still appear to be grinding
forward, but pushing against the weight of a slowing economy and
subdued confidence," said Jim Baird, chief investment officer at
Plante Moran Financial Advisors in Kalamazoo, Michigan.    
 
 
    DOWNBEAT OUTLOOK 
    In separate report, the Philadelphia Federal Reserve Bank
said its business activity index fell to 1.3 in April from 2.0
in March. A reading above zero indicates expansion in the
region's manufacturing.
    It came on the heels of data this week showing a sharp
slowdown in factory activity in New York state in April and a
dip in national manufacturing output last month.
    Details of the survey, which covers factories in eastern
Pennsylvania, southern New Jersey and Delaware, showed weakness.
Measures of factory employment and new orders contracted.
    Inventories fell sharply after being flat in March, an
indication that stock accumulation will not contribute to growth
in the second quarter. Inventories are expected to have
significantly boosted output in the first three months of 2013.
    "This report has to raise some concerns that the nation's
manufacturing sector may be starting to feel the impact of the
higher taxes on households and the cutbacks in government
spending," said Joel Naroff, chief economist at Naroff Economic
Advisors in Holland, Pennsylvania.
    A third report supported views the economy was again headed
for a soft patch this spring. The Conference Board said its
Leading Economic Index slipped 0.1 percent last month, the first
decline since August.
    The data provides ammunition for the Federal Reserve to
maintain its aggressive policy easing, despite a rift among
policymakers on continuing asset purchases.
    "Growth is continuing, but a spring slowdown looks to be in
place. The numbers support the view of many at the Fed that the
end of the liquidity surge is nowhere in sight," said Naroff.
    On Thursday, Minneapolis Fed President Narayana Kocherlakota
said the purchases of government bonds and mortgage-backed
securities were necessary to boost employment but said they
would cause financial market instability for years.
 
    U.S. stocks ended down for the third day this week on the
downbeat data, with the Standard & Poor's 500 index 
breaking below its 50-day moving average for the first time this
year. Treasury debt prices gained slightly, while the dollar
fell marginally against a basket of currencies.  
    Last week's claims data covered the survey period for April
nonfarm payrolls. Claims increased 11,000 between the March and
April survey periods.   
    Given recent volatility because of the early Easter and
school spring breaks this year, claims are probably not useful
in trying to gauge April payrolls.
    Employers added 88,000 workers to their payrolls last month
after a solid 268,000 increase in February. While job growth has
slowed in line with the overall economy, economists said March's
meager gains overstated the labor market's weakness.
    "We see nothing in the jobless claims data to either suggest
that job growth has deteriorated further since March or even to
support the view that March's payroll gain represents a new
trend," said John Ryding, chief economist at RDQ Economics in
New York.
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