Jobless claims jump as factory sector contracts
By Burton Frierson
NEW YORK (Reuters) - U.S. manufacturing contracted for a third straight month in April while the number of workers claiming jobless benefits hit a four-year high and planned layoffs soared, according to data on Thursday that showed the economy remained on shaky ground.
Other data showed personal spending in March was higher than expected, but that underlying inflation pressures were unexpectedly strong. In a sign of weakening consumer demand, U.S. auto sales fell sharply in April.
The manufacturing data, released by the Institute for Supply Management, was marginally better than expected, though it was the fourth month in five that the index showed a contraction in manufacturing.
"The ISM index in April confirms that the manufacturing recession continues, but that the severity of the downturn is on the mild side," said Daniel Meckstroth, chief economist for the Manufacturers Alliance/MAPI, an economic research group.
Wall Street stocks traded in positive territory after the ISM data and later rallied, adding strongly to those gains. The dollar also rose to a five-week high against the euro.
U.S. government bonds, which generally benefit more from weak economic data, retreated in the face of higher stocks.
The Institute for Supply Management's index of national factory activity was unchanged in April from March at 48.6. That was better than economists' median forecast for a result of 48.0, according to a Reuters poll, but still below the level of 50 that separates growth from contraction.
"It looks like we came in slightly above expectations, so this number is consistent with positive growth in the economy," said Michael Darda, chief economist at MKM Partners LLC in Greenwich, Connecticut. Continued...
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