Jobless claims, housing data offer economic hope

Thu Jul 28, 2011 1:10pm EDT
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By Lucia Mutikani

WASHINGTON (Reuters) - The number of Americans claiming new jobless benefits hit a three-month low last week and contracts to buy existing homes rose in June, hopeful signs for an economy that has struggled to regain momentum.

Initial claims for state unemployment benefits dropped 24,000 to 398,000, the Labor Department said on Thursday, below economists' expectations for a fall to 415,000.

A separate report from the National Association of Realtors showed pending home sales rose 2.4 percent in June, the second straight monthly increase. Contracts usually lead sales by a month or two.

The reports offered some relief after a recent string of weak data, which had shown the economy closing out the first half of the year on a soft note. A deadlock in Washington over raising the nation's debt limit has hurt sentiment.

"Claims provide some hints that the economy is going to do better in the third quarter," said Michael Strauss, chief economist at Commonfund in Wilton, Connecticut.

"Assuming we don't get massive government furloughs because we don't get the debt limit raised in the next couple of days or couple of weeks, we would probably see GDP growth in the 3 percent range in the second half of year as opposed to sub 2 percent in the first half."

U.S. stocks rose on the data, a day after posting their biggest fall in eight weeks. Prices for Treasuries also increased despite fears of the government defaulting on its debt, while the dollar fell against a basket of currencies.