WASHINGTON: US housing and manufacturing data showed the economic recovery gaining strength fitfully in December, a day after the Federal Reserve said it was sticking to its huge stimulus plan.
The National Association of Realtors' Pending Home Sales Index, based on contracts signed in December, rose 2 percent to 93.7, above economists' expectations for a 1.0 percent gain. The increase pointed to another rise in sales of previously owned homes.
A separate report from the Commerce Department on Thursday showed orders for a range of domestically manufactured goods increased 0.5 percent last month. But a nearly 100 percent drop in civilian aircraft pulled overall orders down 2.5 percent.
Economists -- who had expected orders to rise 1.5 percent -- were puzzled by the drop, given that Boeing reported an increase in aircraft bookings from November.
"This doesn't change our estimate that fourth-quarter GDP increased by 4.0 percent," said Paul Ashworth, chief US economist at Capital Economics in Toronto.
Supporting views of a pick-up in the growth pace, a proxy for business spending increased 1.4 percent, though smaller than the 3.1 percent increase in November.
But the outlook was clouded somewhat by a spike last week in applications for state unemployment benefits, which the government blamed on snow storms in some parts of the country that kept workers at home and delayed the processing of claims.
The blizzards occurred the prior week, when claims posted their biggest drop in nearly a year. Another snow storm this week could affect claims data in the coming weeks.
Initial claims jumped 51,000 to a seasonally adjusted 454,000, the highest since late October, the Labor Department said on Thursday. That was the largest weekly increase since September 2005. The rise exceeded economists' expectations for a slight gain to 405,000.
A Labor Department official said four states had reported an increase in claims that was due to snow. In addition, he said, seasonal volatility also affected the data.
Still, the four-week moving average of unemployment claims -- a better measure of underlying trends, rose 15,750 to 428,750 last week, implying a gradual labor market recovery.
"At first glance, it's certainly disheartening coming a day after the Fed meeting, at which the Fed maintained its asset purchase plan," said Joe Manimbo, a currency trader at Travelex Global Business Payments in Washington.
The Fed on Wednesday repeated its plan to purchase $600 billion in longer-term Treasury debt by the middle of this year to keep interest rates low and support the economy.
Labor market recovery remains painfully slow, despite signs elsewhere of a pick-up in economic activity, keeping the unemployment rate at an elevated 9.4 percent.
Fed officials acknowledged the improvement in the economic picture, but said the pace of the recovery remained "insufficient to bring about a significant improvement in labor market conditions."
The number of people still receiving benefits under regular state programs after an initial week of aid increased 94,000 to 3.99 million in the week ended Jan 15. The numbers were above market expectations for a dip to 3.85 million and included the week for the household survey from which the unemployment rate is derived.
The prior week's number for the so-called continuing claims was revised up to 3.90 million from 3.86 million.
The number of people on emergency unemployment benefits rose 63,886 to 3.78 million in the week ended Jan. 8, the latest week for which data is available.
A total of 9.4 million people were claiming unemployment benefits during that period under all programs.?Reuters
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