Surprise fall in US unemployment

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The Independent Online

Hopes of a slowdown in the runaway American economy were dented by figures yesterday revealing an unexpected fall in unemployment last week.

Hopes of a slowdown in the runaway American economy were dented by figures yesterday revealing an unexpected fall in unemployment last week.

The number of new claims for jobless benefits fell by 24,000 to its lowest level for two months. Analysts had expected a rise of about 7,000.

In a separate report that added to the picture of a buoyant economy, revised GDP figures showed the US economy growing even faster than previously thought. Growth in the second quarter of the year was 5.6 per cent, revised up from 5.3 per cent and much stronger than the 4.8 per cent for the first quarter.

Analysts said the GDP data was now ancient history but added that a tighter labour market would be of some concern to the Federal Reserve, whose interest rate-setting committee meets next Tuesday.

David Orr, chief economist at First Union, said: "There has been some thought that the labour market was loosening up a bit, but this would call that into question."

The Fed is expected to leave the base rate unchanged following a run of evidence that the US economy is starting to slowdown. In its World Economic Outlook last week, the International Monetary Fund forecast annual US GDP growth would slow from 5.2 per cent this year to 3.2 per cent in 2001.

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