(MENAFN - Arab News) US manufacturing grew in November at its quickest pace in five months, with a rise in domestic demand suggesting factories could provide a boost to economic growth in the fourth quarter.
Other data yesterday showed a drop in new claims for jobless benefits, although they remained elevated due to superstorm Sandy, and only a marginal improvement in consumer sentiment.
Financial information firm Markit said its US "flash," or preliminary, manufacturing Purchasing Managers Index rose to 52.4 from a three-year low of 51.0 in October. A reading above 50 indicates expansion.
Output in the factory sector and domestic new orders also grew at their fastest pace since June, while the pace of hiring in the factory sector was the swiftest in four months.
Some respondents said efforts to rebuild after Sandy may have accounted for some of the increased demand.
The data gives a positive signal for economic growth in the last three months of the year, although Sandy continues to make it more difficult to read the underlying health of the economy.
"Stripping out the short-term boost from Sandy, however, and output is probably flat," said Paul Dales, an economist with Capital Economics in London.
"That's unlikely to change much when the global economy is set to remain weak," he said.
Separately, the Labor Department said initial claims for state unemployment benefits dropped 41,000 to a seasonally adjusted 410,000. That was smack in line with the median forecast in a Reuters poll.
Despite the drop, the level of claims remained elevated due to Sandy, a sign of the substantial disruption to the labor market from the storm. That will likely prove temporary, although economists thought yesterday's data nevertheless pointed to a struggling jobs market.
"There appears to be a noticeable deceleration of growth in the fourth quarter," said Peter Hooper, an economist at Deutsche Bank in New York. "It would not be surprising if some of the new jobless claims are due to underlying weakness," he said.
US financial markets showed little reaction to the data as investors focused on developments in Europe and trading slowed ahead of the Thanksgiving holiday on Thursday. US stocks rose, while Treasury debt prices were down modestly.
An analyst from the Labor Department said several states were still reporting an increase in claims due to Sandy, a mammoth storm that slammed into the East Coast on Oct. 29.
The storm left millions of homes and businesses without electricity, shut down public transportation and led many factories in the Mid-Atlantic and Northeast to curtail production. Retail sales fell as Sandy slammed the brakes on automobile purchases last month.
The data covers the same week when the department collects data for its estimate on hiring during the month, and gives some reason to expect softness in that report due on Dec. 7, although not all analysts expect a significant impact. Nonfarm payrolls grew 171,000 in October.
"We are expecting things to be in the neighborhood of what we have seen, maybe with a pullback in light of the hurricane," said Bricklin Dwyer, an economist at BNP Paribas in New York.
Growth in the US economy has looked uneven in recent months, with business investment sagging due to fears that Congress will slash the budget deficit next year, while consumer spending and the housing market have shown some strength.
Several months of improvement in US consumer sentiment stalled at the end of November as uncertainty grew over federal tax and spending programs next year, a survey showed.
The Thomson Reuters/University of Michigan's final November reading on the overall index on consumer sentiment came in at 82.7, a touch up from 82.6 the month before, but down from a preliminary reading of 84.9 released earlier in the month.
A gauge of future US economic activity rose marginally in October, pointing to modest growth in the near term.
The Conference Board said its Leading Economic Index increased 0.2 percent to 96.0 after advancing 0.5 percent in September. It was the second consecutive month of gains and was in line with economists' expectations.
"Based on the trends, the economy will continue to expand modestly through the early months of 2013," said Ken Goldstein, an economist at the Conference Board.
Another report showed applications for US home mortgages eased last week as interest rates edged up, though demand for new loans improved.
