The steady economic growth pace was also underscored by other data on Thursday showing home resales rising in August to a 17-month high. While factory activity in the mid-Atlantic region slowed in September, orders remained solid, leading manufacturers in the region to increase employment and boost hours for workers.
The reports suggested that housing and manufacturing, the two weak spots in the economy, were stabilizing. The Federal Reserve cut interest rates by another 25 basis points on Wednesday, citing risks to the longest economic expansion in history from a year-long US-China trade war and slowing economic growth overseas.
Fed Chair Jerome Powell said he expected the economy, now in its 11th year of expansion, to continue to "expand at a moderate rate," but noted trade tensions were "weighing on US investment and exports." The US central bank cut rates in July for the first time since 2008. The Fed offered mixed signals on further monetary policy easing. Data, including retail sales, so far in the third quarter suggest the economy is growing close to the April-June quarter's 2.0% annualized rate.
Initial claims for state unemployment benefits rose 2,000 to a seasonally adjusted 208,000 for the week ended Sept. 14, the government said. Economists polled by Reuters had forecast claims increasing to 213,000 in the latest week. Layoffs remain low despite the trade tensions, which have weighed on business investment and manufacturing. But there are concerns that slowing job growth could take some shine off robust consumer spending, which is largely driving the economy.
Job gains have averaged 158,000 per month this year, still above the roughly 100,000 per month needed to keep up with growth in the working age population and sustain a healthy pace of consumer spending. In a second report on Thursday, the National Association of Realtors said existing home sales increased 1.3% to a seasonally adjusted annual rate of 5.49 million units last month.
That was the second straight monthly gain in sales and confounded economists expectations for a 0.4% drop to 5.37 million units. The increase in home resales, which make up about 90 percent of US home sales, came on the heels of data on Wednesday showing housing starts and building permits surged to a more than 12-year high in August. The housing market, which hit a soft patch last year, is being lifted by lower mortgage rates.
In a third report, the Philadelphia Fed said its business conditions index fell to a reading of 12.0 in September from 16.8 in August. The survey's measure of new orders dipped to 24.8 this month from 25.8. Its measure of factory employment in the region that covers eastern Pennsylvania, southern New Jersey and Delaware jumped to a reading of 15.8 in September from 3.6 in the prior month. A gauge of the factory workweek increased to a reading of 13.0 from 6.8 in August.
Manufacturing, which makes up about 11% of the economy, has shouldered the brunt of the US-China trade war. A measure of national manufacturing activity contracted in August for the first time in three years. While factory surveys have remained weak, so-called hard data have suggested the manufacturing downturn could soon run its course. Manufacturing production rebounded 0.5% in August after falling 0.4% in July, the Fed reported on Tuesday.