"Fiscal drag was quite sizeable in the first half of the year, and that drag is starting to fade a little bit"
- Jim O'Sullivan, chief U.S. economist at High Frequency Economics
A bunch of upbeat economic data from the world's largest economy was released on Thursday, indicating that companies across the country are now more optimistic and showing willingness to increase hiring and produce more goods. A report from the Institute for Supply Management showed a gauge of factory activity jumped to 55.4 in July, hitting the highest in two years, supported by strong demand. Figure is higher from previous month's figure of 50.9, and above analysts' estimates for a 53.1 reading. New orders also racked up their best level in more than 2 years, surging to 58.3 from 51.0 a month earlier, while employment gained to 54.4 compared with previous month's 48.7, suggesting the improvement will strengthen in the coming months.
As always on Thursday the Labor Department said that the number of American filing new claims for jobless benefits fell surprisingly last week, touching a 5-1/2 year low, pointing at steadily improving labour market. The number of initial unemployment benefits fell 19,000 to a seasonally adjusted 326,000 in the week ending July 27. Analysts, however, expected jobless claims to rise by 1,000. The less-volatile four-week moving average also fell 4,500 to 341,250. The overall jobless rate is seen ticking down a tenth of percentage point to 7.5, moreover, there risk payrolls can surprise market participants on the upside, as a report earlier showed private employers maintained a higher pace of hiring last month.
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