US jobless claims plunge, leading index rises

NEW YORK - The number of Americans filing new claims for jobless benefits posted the largest drop since 2002 last week and a separate report on the US economy hinted growth would remain robust in the months ahead.

The decline in unemployment benefit applicants did not signal any major shift in the labour market, since it was due largely to seasonal shifts in the auto industry.

"Seasonal adjustment problems related to the reversal of the auto-retooling shutdowns entirely explain this drop," Haseeb Ahmed, an economist at JP Morgan said.

However, this was the same week used for the government's widely watched payrolls survey, and could signal a strong July reading for the report.

The drop in claims was also bigger than expected, falling 34,000 to 303,000 last week from a revised 337,000 the prior week, the Labour Department said, bringing claims to the lowest level since April. Wall Street had expected a decrease to 327,000.

The four-week moving average, which smooths weekly volatility to offer a clearer picture of the pace of layoffs, eased to 318,000 from 321,250 in the prior week.

Separately, a gauge that attempts to measure the future direction of the economy rose 0.9 per cent last month and the figures for the two previous months were revised upward, a private research group said today.

The New York-based Conference Board said its index of leading indicators rose to 137.7 in June.

May's index was revised upward to a flat reading from a previously reported 0.5 per cent drop, and April's was nudged up to a 0.2 per cent increase from a previously reported unchanged reading.

Of the 10 indicators in the index, only capital goods decreased last month.

Financial markets showed little reaction to the figures.

Investors were concentrating instead on explosions reported on the London public transit system and on China's decision to scrap the yuan currency's peg to the US dollar and link to a basket of currencies.

- REUTERS