By Jason Lange
WASHINGTON, March 28 (Reuters) - The number of Americans
filing new claims for unemployment benefits rose more than
expected last week, but probably not enough to suggest the labor
market recovery was taking a step back.
A separate report on Thursday showed the U.S. economy
expanded at a sluggish pace in the fourth quarter of 2012
although a big gain in business investment and higher exports of
services led the government to push up its previous estimate for
The Labor Department said initial claims for state
unemployment benefits increased 16,000 to a seasonally adjusted
357,000. Despite the gain, they were in the middle of their
range for this year.
U.S. stock index futures briefly trimmed gains after the two
reports were releases.
The four-week moving average for new claims, a better
measure of labor market trends, rose 2,250 to 343,000. Still,
for many economists a trend reading below 350,000 level points
to a firm pace of hiring in March.
A government report due on April 5 is expected to show
employers added 197,000 workers to their payrolls in March. That
would be slower than during the prior month but still
suggestive of a labor market recovery that is gaining traction.
Despite recent a recent acceleration in hiring, the Federal
Reserve has appeared worried that budget tightening by the
government could dampen progress made in the labor market, and
policymakers last week pledged to keep buying bonds at a monthly
pace of $85 billion until the labor market outlook improved
'The underlying growth trend is showing some encouraging
signs, but the key risk is how much fiscal tightening we'll see
this year,' said Laura Rosner, economist at BNP Paribas in New
A rash of recent data has shown the economy gathering
strength. Retail sales have been stronger than expected,
manufacturing output has picked up and employment growth has
quickened, with the jobless rate dropping to 7.7 percent last
month from 7.9 percent in January.
A BIT MORE GROWTH
In a separate report, the U.S. Commerce Department said
gross domestic product expanded at a 0.4 percent annual rate in
the last three months of 2012, just below the 0.5 percent gain
forecast by analysts in a Reuters poll.
The growth rate was the slowest since the first quarter of
2011 and far from what is needed to fuel a faster drop in the
It was, however, higher than the government's previous
estimate of a 0.1 percent growth rate.
Much of the weakness came from a slowdown in inventory
accumulation and a sharp drop in military spending. These
factors are expected to reverse in the first quarter.
Consumer spending was more robust by comparison, although it
only expanded at a 1.8 percent annual rate. That was a slower
pace of growth than the government had previously estimated.
Household spending powers about 70 percent of national
output, and this still-lackluster pace of growth suggests
underlying momentum in the economy was quite modest as it
entered the first quarter, when a series of fiscal austerity
Thursday's report is the government's third estimate of
growth for the final three months of 2012. In the first
estimate, the government shocked economists by saying the
economy shrank at a 0.1 percent annual rate.
Thursday's report showed the reasons for the meager pace of
economic activity were mostly as initially estimated.
Inventories subtracted 1.52 percentage points from the GDP
growth rate during the period, a bit less of a drag than in the
second growth estimate, which was published on Feb. 28. Defense
spending plunged at a 22.1 percent rate, shaving 1.28 points off
growth as in the previous estimate.
There were some bright spots, however. The report showed
business investment rose at a 13.2 percent rate, a bigger gain
than initially estimated. The extra growth was mostly from more
construction spending by businesses.
(Reporting by Jason Lange; Additional reporting by Lucia
Mutikani in Washington and Richard Leong in New York; editng by
Keywords: USA ECONOMY/
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