US jobless claims dip, consumer spending rises

New US claims for jobless benefits dipped last week and consumer spending increased in November for a fifth straight month, reinforcing views of a solid economic growth pace in the fourth quarter. Further signs that the economy gained momentum as the year ended also were offered by other data on Thursday showing gains in orders for a range of long-lasting manufactured goods and in new home sales last month.
-- Consumer spending up 0.4pc in Nov
-- Durable goods orders ex-transportation surge 2.4pc
-- New home sales rise 5.5pc in November
"The data releases today support our estimate that GDP growth probably accelerated to between 3.5 percent and 4.0 percent annualised in the fourth quarter," said Paul Ashworth, senior US economist at Capital Economics in Toronto. Initial jobless claims fell 3,000 to a seasonally adjusted 420,000, the Labour Department said, matching economists' expectations. A separate report from the Commerce Department showed spending rose 0.4 percent after increasing by an upwardly revised 0.7 percent in October.
Economists polled by Reuters had expected spending, which accounts for about 70 percent of US economic activity, to rise 0.5 percent last month after a previously reported 0.4 percent gain in October. Prices for US government debt were trading down, while stocks on Wall Street were flat. The US dollar was flat against a basket of currencies. In another report, the Commerce Department said orders for long-lasting manufactured goods excluding transportation increased 2.4 percent, the largest increase since March, after a 1.9 percent drop in October.
But overall orders dropped by a larger-than-expected 1.3 percent last month, dragged down by a plunge in bookings for civilian aircraft and motor vehicles. "Durable goods orders were reassuring in that we saw a manufacturing plateau over the summer and while the number released today was not strong, at least it showed some resilience in terms of capital goods orders apart from aircraft," said Pierre Ellis, a senior economist at Decision Economics in New York. New home sales increased 5.5 percent to a seasonally adjusted 290,000 unit annual rate last month, but below economists' expectations for a rise to a 300,000 unit pace. With the economic outlook brightening, consumers' mood is also perking up.
The Thomson Reuters/University of Michigan's final reading on the overall index on consumer sentiment rose to 74.5 this month, the highest since June, from 71.6 in November. The spending report also showed the Federal Reserve's preferred measure of consumer inflation - the personal consumption expenditures price index, excluding food and energy - rose 0.1 percent after being flat for four straight months.
In the 12 months through November, the core PCE index rose 0.8 percent, the same margin as in October and still the smallest year-on-year gain since records started in 1960. Spending was supported by a 0.3 percent increase in incomes, which was slightly more than the 0.2 percent rise economists had expected. Incomes rose 0.4 percent in October. Consumers also dipped into their savings to fund purchases.
Spending adjusted for inflation rose 0.3 percent after advancing 0.5 percent in October. The seventh straight month of gains bolstered views the spending pace gathered momentum in the current quarter after growing at a 2.4 percent rate in the July-September period. The saving rate slipped to 5.3 percent last month, the smallest since March, from 5.4 percent in October. Savings dropped to $614.8 billion, the lowest level since March.