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Figures underline strong US economy

Diane Coyle
Wednesday 03 July 1996 23:02 BST
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There was fresh evidence yesterday of the strength of the US economy as the Federal Reserve's open market committee finished its policy meeting. But, despite the evidence, the Fed did not raise interest rates.

Factory orders rose for the third month running in May, the number of new new jobless claims declined unexpectedly last week, and consumer confidence has reached a six-year high according to a poll for ABC News.

Orders rose by 1.9 per cent in May, while the initial estimate of a small decline in April was revised to a 0.2 per cent increase. The jump in May was partly explained by aircraft orders, but there were increases in other categories too, notably industrial hardware and cars. Excluding aircraft and transportation, orders were up 0.4 per cent during the month. In another encouraging sign of stronger demand, levels of stocks decreased slightly in May, while unfilled orders increased by 0.4 per cent.

Jobless claims fell by 4,000 to 351,000 in the last week of June, the third weekly decline in a row. The less erratic four-week average of new claims fell to 355,750 from 356,500.

This suggests figures for employment in June, due on Friday, could be stronger than anticipated. A surprise surge in the number of jobs in May hit shares on Wall Street due to fears strong growth would force the Fed to raise interest rates.

US employment has risen by an average of 222,400 a month so far this year, a pace many analysts think will have the Federal Reserve chairman Alan Greenspan worried about future wage inflation.

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