U.S. economic data point to second-quarter GDP rebound

Thu May 19, 2016 12:23pm EDT
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By Lucia Mutikani

WASHINGTON (Reuters) - The number of Americans filing for unemployment aid fell from a 14-month high last week, the latest sign the economy was picking up speed in the second quarter and likely would be healthy enough for the Federal Reserve to raise interest rates in June.

The economic outlook got a further boost from another report on Thursday showing a gauge of future activity jumped in April. The reports followed recent upbeat data on retail sales, home building and industrial production.

Minutes from the Fed's April 26-27 policy meeting, published on Wednesday, showed most officials considered it appropriate to raise rates next month if data continued to point to an improvement in second-quarter growth.

The Fed raised its benchmark overnight interest rate in December for the first time in nearly a decade.

"The economy is coming back. This is further ammunition to our view that the Fed will restart the normalization process, either in June or July," said Michael Strauss, chief economist at Commonfund in Wilton, Connecticut.

Initial claims for state unemployment benefits declined 16,000 to a seasonally adjusted 278,000 for the week ended May 14, the Labor Department said. That was the biggest drop since February and snapped a three-week string of increases.

Claims have now been below 300,000, a threshold associated with a strong job market, for 63 straight weeks, the longest stretch since 1973.

Jobless claims had risen since mid-April, with economists blaming a variety of factors, including the different timing of school spring breaks, which often makes it difficult to adjust the data around this time of the year.   Continued...

People walk past a "Now Hiring" sign in Manhattan in New York City, U.S., May 10, 2016.  REUTERS/Brendan McDermid