The slowdown in the U.S. economy persisted early in the third quarter with factory activity in the U.S. Mid-Atlantic region contracting in July for a third straight month and new claims for jobless aid surging last week.
Other reports on Thursday showed home resales slumped to their lowest level in eight months in June and a gauge of future economic activity slipped last month, more evidence the economy has slowed significantly in recent months.
"The data confirm that the economy has cooled off pretty considerably late in the second quarter and early in the third quarter from the pace we saw earlier in the year," said Omair Sharif, an economist at RBS in Stamford, Connecticut.
The economy has been hit by fears of deep government spending cuts and higher taxes next year, and troubles from the debt crisis in Europe, culminating in slower job growth, weak consumer spending and soft manufacturing output.
The Philadelphia Federal Reserve Bank said its business activity index was a minus 12.9 in July compared to a minus 16.6 last month. A reading below zero indicates contraction in output in factories in eastern Pennsylvania, southern New Jersey and Delaware,
New orders dropped for a third consecutive month and a gauge of employment declined sharply to a near three-year low.
Growth in U.S. factory output slowed to a 1.4 percent annual rate in the second quarter after a brisk 9.8 percent pace in the first three months of the year, and the regional factory index suggested it continues to lose momentum.
Joel Naroff, chief economist at Naroff Economic Advisors in Holland Pennsylvania, said the biggest factor weighing on the recovery was fear that politicians in Washington would be unable to avoid the so-called fiscal cliff at the turn of the year.
Read more: http://www.reuters.com/article/2012/07/19/us-jobless-idUSBRE86I0NI20120719
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