The number of Americans filing new claims for jobless benefits hit a 3.5-year low last week, bolstering views the economy was gaining momentum, even though third-quarter growth was revised down.
Initial claims for state unemployment benefits dropped 4,000 to a seasonally adjusted 364,000, the Labor Department said today, the lowest level since April 2008.
The claims data, which covered the survey period for nonfarm payrolls, helped to take the sting out of a separate report from the Commerce Department showing that gross domestic product grew at a 1.8 per cent annual rate in the third quarter.
Growth, which had previously been reported to have expanded at a 2 percent pace, was held back by a sharp drop in healthcare spending.
"The employment situation continues to show strong signs of a recovery and goes against the grain of what people felt four months ago," said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co in New York.
US stock index futures briefly extended gains on the data, while Treasury debt prices rose. The dollar rose against the euro.
Though spending on healthcare dropped by $2.2 billion, spending on durable goods was stronger than previously estimated, indicating household appetite to consume remains healthy.
Healthcare spending had previously been reported to have increased at a $19.7 billion rate. Healthcare spending subtracted about 0.1 percentage point from the GDP change in the final revision, whereas the previous estimate had it adding 0.61 percentage point to growth.
Even as much of the rest of the world is slowing down and a mild recession is forecast in Europe next year, the US economy remains resilient.
The labour market is improving, households continue to spend, home building is picking up and factory output is expanding, putting the economy on course for at least a 3 percent growth pace in the fourth quarter.
That would be the fastest pace in 18 months.
Despite the downward revision, last quarter's growth is still a step-up from the April-June period's 1.3 percent pace. Part of the pick-up in output during the last quarter reflects a reversal of factors that held back growth earlier in the year.
A jump in gasoline prices had weighed on consumer spending earlier in the year, and supply disruptions from Japan's big earthquake and tsunami in March had curbed auto production.
The government revised consumer spending to a 1.7 per cent growth rate from 2.3 percent because of adjustments to healthcare services, in particular nonprofit hospitals.
Spending on durable goods was, however, revised up to a 5.7 per cent pace from 5.5 per cent.
Business inventories dropped $2.0 billion, which sliced off 1.35 percentage points from GDP growth. Inventories had previously been estimated to have declined $8.5 billion.
The drag from inventories was offset by strong business spending, which increased at a 15.7 per cent rate, instead of 14.8 per cent.
Excluding inventories, the economy grew at a still brisk 3.2 per cent rate, revised down from a 3.6 per cent pace. Final sales increased at a 1.6 per cent pace in the second quarter.
The Department also said after-tax corporate profits increased at a 2.7 per cent rate, revised down from 3.0 per cent. After tax profits increased at a 4.3 per cent rate in the second quarter.
Export growth was stronger than previously estimated, rising at a 4.7 per cent rate instead of 4.3 per cent. Imports increased at a much faster 1.2 per cent rate rather than 0.5 per cent.
Trade contributed 0.43 percentage point to GDP growth. Elsewhere, residential construction grew at a 1.3 per cent rate instead of 1.6 per cent. Government spending fell at an unrevised 0.1 per cent.
The GDP report also showed some inflation pressures in the economy. A price index for personal spending rose at an unrevised 2.3 per cent rate in the third quarter.
Reuters
