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Economic signs show recovery, point to low rates

By Lucia Mutikani

Thursday, April 22, 2010; 11:05 AM

WASHINGTON (Reuters) – The number of U.S. workers filing new claims for jobless aid fell last week as the labor market gradually heals and producer price data showed inflation remained muted, despite a surge in food costs last month.

In other data, sales of previously owned home rose 6.8 percent to an annual rate of 5.35 million units in March as Americans rushed to take advantage of a tax credit for home buyers, the National Association of Realtors said.

Analysts said the data on Thursday pointed to a moderate economic recovery that should see the Federal Reserve renew its pledge to keep benchmark interest rate exceptionally low for an extended period at its regular two-day meeting next week.

“Inflation is still not an issue that the Fed is concerned about and the job market is very slowly improving, which is an underpinning for moderate economic growth being sustained,” said Stuart Hoffman, chief economist for PNC Financial Services in Pittsburgh. “It’s too soon for the Fed to move away from the extended period language.”

Initial claims for state unemployment benefits dropped 24,000 to a seasonally adjusted 456,000, the Labor Department said on Thursday, resuming a downward trend that had been interrupted by the Easter holiday. That compared to market expectations for 455,000.

For full story on the Washington Post, click here