Jobless claims, leading index fall
WASHINGTON (Reuters) - Initial claims for U.S. jobless benefits fell to their lowest level in two months last week, but a forward-looking indicator of economic activity suggests cooler growth in the second half of 2007, according to reports on Thursday.
First-time claims for state unemployment benefits fell to 301,000 in the week ended July 14 from an upwardly revised 309,000 claims the prior week, the Labor Department said. Economists had expected them to rise slightly.
It was the second consecutive weekly decline and took initial claims to their lowest level since mid-May.
In a separate report, the New York-based Conference Board said its Index of Leading Economic Indicators fell 0.3 percent in June after a downwardly revised 0.2 percent rise in May.
Wall Street had expected the index to hold steady.
"The leading index has slowed in recent months, suggesting a possible softening of the overall pace of economic activity later in the second half of this year," said Ken Goldstein, labor economist for the Conference Board.
Prices for U.S. government bonds slipped as the unexpected drop in weekly claims offered a convenient excuse for investors to book profits. U.S. stocks opened with solid gains as companies reported earnings above expectations ID:.N.
"It is still a mixed job picture," said Robert Brusca, chief economist for Fact and Opinion Economics in New York.
A four-week moving average of initial claims, a more reliable gauge of the pace of layoffs because it irons out weekly fluctuations, fell to 312,000 from an upwardly revised 318,250 the previous week.
However, the number of workers remaining on benefit rolls after drawing an initial week of aid rose 20,000 to 2.57 million in the week ended July 7, the latest period for which figures were available. The rise pushed the so-called continued claims to their highest level in three months.
Initial "claims are falling and continued claims continue to creep up. This suggests that people are receiving their claims longer than before," Brusca said. "Still, the job market has reasonable strength," he added.
Analysts said July is typically a volatile month for jobless claims as auto plants and other factories shut down temporarily for retooling.
"The distortions caused by the annual auto retooling shutdowns are so big that these data should be ignored," said Ian Shepherdson, chief U.S. economist for High Frequency Economics in Valhalla, New York.
"There is no way to extract the underlying trend in claims from the numbers; we'll need to wait another couple of weeks before the distortions fade sufficiently to have any confidence that the claims numbers are telling us anything about the true state of the labor market," he said.
(Additional reporting by Richard Leong, Caroline Valetkevitch and Pedro Nicolaci da Costa in New York)
