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Jobless claims hit six-year trough as US growth pushes ahead

An employee works on a Telsa Model S sedan on an assembly line at the company's assembly plant in Fremont, California.
Noah Berger | Bloomberg | Getty Images
An employee works on a Telsa Model S sedan on an assembly line at the company's assembly plant in Fremont, California.

The number of Americans filing new claims for jobless benefits fell last week to a near six-year low, a promising sign for the labor market. Separately, the U.S. government left its estimate for economic growth in the second quarter unchanged, but said prices for goods and services purchased by U.S. households fell for the first time in four years.

Initial claims for state unemployment benefits dropped 5,000 to a seasonally adjusted 305,000, the Labor Department said on Thursday.

The reading gives a clearer view of the labor market's health after an update in government computer systems in California and Nevada threw claims data into disarray earlier this month.


The updates created a backlog in unprocessed claims that had been distorting the data, but a Labor Department analyst said both states had reported they had caught up in counting new filings.

The four-week average of new claims, which smooths out weekly volatility, fell 7,000 to 308,000, the lowest level since June 2007.

Growth inches forward

The Commerce Department said on Thursday gross domestic product (GDP) expanded at a 2.5 percent annual rate in the April-June period.

Also in the report, the department said its price index for consumer purchases, which is the Federal Reserve's preferred gauge of inflation, fell at a 0.1 percent rate.

That is a worrisome sign for the national economy because it suggests businesses have little leverage to raise prices.

It was the first decline since the first quarter of 2009, which were some of the darkest days of the 2007-09 recession.

Even stripping out volatile food and energy costs, prices rose at only a 0.6 percent rate, also the weakest reading for this so-called core category since early 2009.

The report also showed government austerity dragged on U.S. economic growth a little less in the second quarter than initially estimated, chipping about a tenth of a point off the growth rate.

--By Reuters

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