US reports improved employment figures
The US Department of Labor reported on Thursday that new unemployment claims dropped by 34,000 to 303,000 last week, the largest drop in new claims in two and a half years and the biggest weekly improvement since the end of December, 2002.
The drop, which was over triple what analysts had been expecting, has been largely attributed to a slacking of layoffs in the automobile industry, where recent weeks have seen the temporary closure of auto plants while they retool for the start of production on next year’s models.
In addition, the Conference Board, based in New York, released its Composite Index of Leading Economic Indicators.
This index, which is meant to predict economic activity over the next quarter to half a year, was up 0.9 percent to 137.7 in June, after not moving at all in May and only an 0.2 percent gain in April.
The Index is made up of 10 indicators; seven of them increased in June, while two others remained unchanged and one, new orders for nondefense products, declined.
While one analyst said that July’s result showed that the US economy is continuing to expand, growth was probably slowing from its 2004 expansion of 4.4 percent and that the economy would likely grow by 3.5 percent this year and by 3.25 percent next year, and that this meant that the interest rate increases by the Federal Reserve were doing what they were meant to do.
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