Jobless claims fall to 453K
New U.S. claims for jobless benefits fell last week, pointing to a modest strengthening in the labor market, while second-quarter growth was revised a touch higher on firmer consumer spending.
The data on Thursday offered hope for a pick-up in economic activity in the third quarter.
"It's encouraging to see that jobless claims are trending lower now. And also it looks like the U.S. economy entered the third quarter with a little bit more momentum than previously expected," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington.
Initial claims for state unemployment benefits fell 16,000 last week to 453,000, the Labor Department said, exceeding market expectations for a decline to 460,000.
Separately, gross domestic product growth -- which measures total goods and services output within U.S. borders -- was revised up to an annualized rate of 1.7 percent from 1.6 percent, the Commerce Department said in its final estimate.
That compared to financial markets' expectations for a 1.6 percent pace and represented a sharp slowdown from the first quarter's 3.7 percent growth rate.
U.S. stock index futures turned positive on the data, while Treasury debt prices pared gains. The U.S. dollar cut losses against major currencies.
Although the economy has now grown for four straight quarters, the recovery from the longest and deepest downturn since the Great Depression has lacked strength to chip away at a 9.6 percent unemployment rate.
The Federal Reserve last week signaled it was ready to inject more money into the economy to shore up the recovery and avert a damaging downward spiral in prices.
Growth in the second quarter was supported by consumer spending, which was revised up to a 2.2 percent growth rate, the largest increase in three years, from the previously reported 2.0 percent rise.
Consumer spending, which accounts for more than two-thirds of U.S. economic activity, grew at a 1.9 percent rate in the January-March period.
Business inventories increased $68.8 billion rather than the $63.2 billion reported last month. The change in inventories contributed 0.82 percentage points to second-quarter GDP.
Excluding inventories, the economy expanded at a 0.9 percent pace instead of the 1.0 percent rate reported last month.
But a 33.5 percent jump in imports, which was previously reported as a 32.4 percent increase, kept growth on a weak trajectory. Analysts believe the surge in imports was likely the result of Chinese exporters rushing to push through goods before the expiration of value added tax rebates.
The growth in imports, which was the strongest in 26 years and eclipsed a 9.1 percent rise in exports, created a trade deficit that chopped 3.5 percentage points from GDP.
Analysts do not expect the robust import growth pace to continue, which means trade will be less of a drag on growth in the third quarter.