Initial Jobless Claims Fall To 359,000; US 2Q GDP Cut To 1.3% On Drought

Fewer Americans than forecast filed applications for new jobless benefits last week, the Labor Dept. said Thursday. But the U.S. economy expanded at a much slower pace than initially estimated.

In the week ending Saturday, applications for unemployment insurance payments fell by 26,000 to a seasonally adjusted 359,000. The prior week's figure was revised upward to show 3,000 more applications than previously reported. Economists polled by Reuters had forecast claims would dip to 378,000 last week.

The four-week moving average for new claims, a better measure of labor market trends than the weekly report, dropped 4,500 to 374,000.

A separate report showed that economic growth in the U.S. was much weaker than previously estimated in the second quarter as inventories were hurt by a drought that gripped large parts of the country in the summer.

Gross domestic product (GDP) expanded at a 1.3 percent annual rate, the slowest pace since the third quarter of 2011 and down from last month’s 1.7 percent estimate, the Commerce Dept. said in its final estimate on Thursday.

Economists had expected that second-quarter GDP growth would be unrevised at a 1.7 percent pace. The U.S. economy grew at a 2 percent pace in the January-March period.