Data from US shows recovering economy

Initial claims for state unemployment benefits climbed 13,000 to 336,000, just above the level expected by economists in a Reuters poll, Labor Department data showed.

Despite the increase, the four-week moving average for claims, a better gauge for labour market trends, fell to its lowest level since November 2007, suggesting the economy was growing enough to fuel steady improvement in the labour market.

“The general point is that claims have fallen in the second half of the year,” said Gus Faucher, an economist at PNC Financial Services in Pittsburgh. “We are looking at moderate job growth.”

Financial data firm Markit said its ‘flash’, or preliminary, index on factory activity in August rose to 53.9, its best showing since March, from 53.7 in July. A reading above 50 indicates expansion.

A sub-index that measures overall output declined to 53.4 from 54.8, its lowest level in three months, suggesting the US economic expansion remains “disappointingly sluggish”, Markit chief economist Chris Williamson said.

New orders, however, hit a seven-month high and firms took on new workers at their fastest pace in four months.

“Hopefully the faster growth of new orders seen during August will translate into increasingly strong production gains in coming months, and also boost hiring,” Williamson added.