US factories grow despite global slowdown
Factories shrugged off weakness in the global economy during November as manufacturing activity rose to its highest level in five months, giving a fresh sign that the American economy could be accelerating.
Washington: Factories shrugged off weakness in the global economy during November as manufacturing activity rose to its highest level in five months, giving a fresh sign that the American economy could be accelerating.
Also pointing to stronger growth, US construction spending increased more than expected in October.
"We could see an acceleration in the momentum ... in the manufacturing sector and the economy more generally," Millan Mulraine, a macro strategist at TD Securities in New York, said on Thursday following the data's release.
The Institute for Supply Management said its index of national factory activity rose to 52.7 from 50.8 the month before. The reading topped expectations of 51.5, according to a Reuters poll of economists.
Separately, the Commerce Department said construction spending rose 0.8 percent to an annual rate of USD 798.53 billion.
However, new claims for unemployment insurance rose last week in a reminder that any healing in the country's battered labor market will be slow.
"They're not in a danger zone, but the trend is not becoming healthier," Pierre Ellis, an economist at Decision Economics in New York, said of the claims data.
Initial claims for state unemployment benefits climbed to a seasonally adjusted 402,000 from an upwardly revised 396,000 in the prior week, the Labor Department said on Thursday.
Initial claims below the 400,000 mark are normally seen as pointing to some healing in the jobs market.
The US economy has gathered steam in the second half of the year thanks to robust consumer spending and factory output, with the wider economy expanding at a 2 percent annual rate in the third quarter. It could accelerate in the fourth quarter.
That could help the country avoid a new recession, which is expected in the euro zone. Economists expect Friday's payroll report for November to show 122,000 jobs were created during the month, more than the previous month.
US Treasury debt prices held steady at lower levels as the data reduced fears about a recession despite the festering debt problems in Europe. Stock prices were slightly lower.
Black Friday help
Retailers that stuck with their same old holiday season strategies were dealt a blow in November, while earlier hours and bigger promotions last weekend, which traditionally kicks-off the holiday shopping season, were the keys to success for other chains.
Total retailer sales over the weekend, reached USD 52.4 billion, up from USD 45 billion last year, according to the National Retail Federation.
Overall, November sales at stores open at least a year rose as they were expected to, though there were clear winners and losers during a critical month for the retail industry. Still, economists see a risk of a US recession next year, especially if lawmakers allow extended unemployment benefits and a payroll tax cut to expire at the end of 2011.
The euro zone sovereign debt crisis also could derail the country's recovery from the deep 2007-2009 recession, which has left the unemployment rate stuck around 9 percent.
European policymakers are trying to contain the debt troubles, and the European Central Bank signaled on Thursday it could take stronger action if political leaders agree next week on much tighter budget controls in the 17-nation euro zone.
In much of the world, economic growth appears to be slowing.
Manufacturing activity is contracting across Europe and most of Asia, data showed on Thursday, and a Chinese official declared the world economy faces a worse situation than in 2008, when Lehman Brothers collapsed.
In the US labor report, the four-week moving average of claims, a closely followed measure of labor market trends, increased 500 to 395,750.
Economists polled by Reuters had forecast weekly claims at 390,000.
"If claims start to rise from here it would not be a good sign for the economy," said Gary Thayer, a macro strategist at Wells Fargo Advisors in St. Louis.