Factory activity in Middle Atlantic States braked sharply in April and the number of Americans claiming new jobless benefits fell less than expected, implying the economy was struggling to regain momentum.
The reports came a week before government data is expected to show growth slowed significantly in the first quarter. The economy grew at a 2.0% annualized rate, according to a Reuters survey, after a 3.1% pace in the last three months of 2010.
"The economy certainly lost some steam through the first quarter, [but] the underlying health remains sound," said Brian Levitt, an economist for OppenheimerFunds in New York. "It's an economy that is likely to grow, but outsized growth is not on the horizon."
The Philadelphia Federal Reserve Bank's business activity index fell to 18.5 in April, pulling back from March's 27-year high of 43.4 and far exceeding economists' expectations for a drop to 37.