U.S. factory output nears a longtime high
U.S. factory activity held near a 2 1/2-year high in December, and the number of Americans filing new claims for jobless benefits fell again last week, suggesting the economy was poised for stronger growth in 2014.
The strengthening fundamentals were underscored by other data Thursday showing construction spending hit its highest level in nearly five years in November.
"The underlying trends are pointing to the economy accelerating as we move through the year," said Joel Naroff, chief economist at Naroff Economic Advisors in Pennsylvania.
The Institute for Supply Management (ISM) said its index of national factory activity stood at 57.0 last month. The index had climbed to 57.3 in November, the highest since April 2011.
A reading above 50 indicates expansion. With a gauge of new orders hitting a 3 1/2-year high and inventories declining, manufacturing activity is set to accelerate early in the year.
While manufacturing accounts for only about 12 percent of the economy, it has been the key driver of recovery from the 2007-09 recession.
A separate report from the Labor Department showed initial claims for state jobless benefits slipped 2,000 to a seasonally adjusted 339,000 last week.
Though claims continue to be plagued by seasonal volatility, economists said last week's decline was consistent with an improvement in labor market conditions.
While the outlook for the economy is upbeat, there are some areas of concern. Jobless benefits for more than a million long-term unemployed Americans expired on Dec. 28, which could hurt consumer spending and also artificially lower the jobless rate.