The number of Americans filing for unemployment benefits unexpectedly fell last week, hitting its lowest level since 1973, suggesting an apparent sharp slowdown in economic growth in the first quarter could be temporary.
While another report on Thursday showed a mild weakening in factory activity in the mid-Atlantic region in April, manufacturers were fairly upbeat about business prospects in the next six months. This, together with labor market buoyancy bodes well for a pick-up in economic growth in the second quarter.
“The labor market continues to improve. If the apparent slowing in GDP in the first quarter was truly a sudden change in trend, we should have seen something happen in claims by now,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics in Valhalla, New York.