NEW claims for jobless benefits tumbled to a near two-year low last week, but a modest gain in industrial output and a third monthly drop in wholesale prices in June confirmed a slackening in the economy’s recovery.
data yesterday also implied that the slowdown in manufacturing extended into July, but analysts said there was no evidence the economy was sliding back into recession. “The numbers are consistent with a slowdown in the rate of growth in the U.S. and the global economy, but not a double dip,” said Nigel Gault, chief US economist at IHS Global Insight.
“The evidence is not saying we have lapsed; the factory indicators are still pointing to growth,” he added.
Initial claims for state unemployment benefits dropped 29,000 to 429,000 last week, the lowest level in 23 months, as seasonal layoffs at factories eased, the US Labour Department said.
The relatively good news on employment was overshadowed by a Federal Reserve report showing industrial production rose 0.1 per cent last month, braking sharply from May’s 1.3 per cent advance. Manufacturing output declined 0.4 per cent, snapping a three-month streak of gains.
That weakness probably persisted this month, with measures of factory activity in New York state and the mid-Atlantic region slowing sharply from June.
The manufacturing reports reinforced views that the recovery lost momentum in the past few months — much sooner than most economists had expected.