Latest Data Encourages Economists

The strengthening fundamentals were underscored by other data on Thursday showing that construction spending in November hit its highest level in nearly five years.

“The underlying trends are pointing to the economy accelerating as we move through the year,” said Joel Naroff, chief economist at Naroff Economic Advisors. “Conditions seem to be coming together for a very good year.”

The Institute for Supply Management said its index of national factory activity stood at 57.0 last month. The index climbed to 57.3 in November, its highest since April 2011.

A reading above 50 indicates expansion. With a gauge of new orders hitting a three-and-a-half-year high and inventories declining, manufacturing activity seemed set to accelerate early in the year.

A Labor Department report showed initial claims for state unemployment benefits slipped 2,000 last week to a seasonally adjusted 339,000. It was the second straight week of declines.

Though jobless claims continue to be plagued by seasonal volatility, economists said last week’s decline was in line with other indicators showing an acceleration in job growth.

A Commerce Department report showed that construction spending increased 1 percent in November to a seasonally adjusted annual rate of $934.4 billion, its highest level since March 2009. This was the eighth straight month that such spending increased, reflecting solid gains in private construction outlays.

Residential construction rose 1.9 percent in November, and commercial construction climbed 2.7 percent.