US spending increased for the first time in years in March despite recent news that US jobless claims were up.
Jobless claims rose to 344,00 for the second week in a row. with the consensus for 320,00, down from revised 330,000.
On a positive note for the country, the federal government reported that factory activity boomed for a third straight month in April.
The Commerce Department said consumer spending increased 0.9 percent after rising by 0.5 percent in February. March’s gain was the biggest since August 2009 and beat economists’ expectations for a 0.6 percent rise.
Consumer spending accounts for more than two-thirds of U.S. economic activity.
The news points to positive economic growth according to analysts, who see the economy emerging from yet another slump that has been difficult to beat.
While another report from the Labor Department showed an unexpected rise in the number of Americans filing for unemployment benefits last week, the overall trend in initial claims continued to point to improving labor market conditions.
Economics note that the news of more consumer spending would help bolster the economic picture in May and June.
“It reinforces our expectation for a 3.5 percent or better second-quarter growth performance,” said Millan Mulraine, deputy chief economist at TD Securities in New York.