Factory activity grows as new claims for jobless benefit fall

US factory activity grew the most in nearly two years in January and the number of new claims for jobless benefits dropped to a five-year low last week, giving strong signals on the economy’s pulse.

A separate report from the Labor Department showed initial claims for state unemployment benefits fell by 5,000 to 330,000, the lowest since January 2008 when the 2007-2009 recession had just begun.

Together, the data suggest the economy entered the new year with some underlying momentum despite an ongoing political battle in Washington over fiscal policy.

“The economy is structurally doing a little bit better,” said Michael Strauss, an economist at Commonfund in Wilton, Connecticut.

Economists have cautioned about reading too deeply into this month's figures on jobless claims, which tend to be volatile around this time of the year because of large swings in the model the government uses to iron out seasonal fluctuations. Reuters