Harsh weather, the now-settled labour dispute at the country’s busy West Coast ports, softer global demand, and a strong dollar undercut growth early in the first quarter.
Yesterday’s upbeat reports, however, implied the slowdown would be temporary.
“The good news is that claims and the services sector data suggest the economy has gained some momentum heading into the second quarter,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania.
Initial claims for state unemployment benefits dropped 9,000 to a seasonally adjusted 282,000 for the week ended March 21, the Labor Department said.
That was the lowest level since mid-February and was better than economists’ expectations for a dip to 290,000.
The four-week moving average of claims, considered a better measure of labour market trends as it irons out week-to-week volatility, fell 7,750 to 297,000 last week.
In a separate report, financial data firm Markit said its preliminary or “flash” Purchasing Managers Index for the service sector rose to 58.6 in March, the highest reading since September, from 57.1 in February.
A reading over 50 signals expansion in the vast services sector. Survey respondents said economic conditions were improving and reported an increase in new orders and an accumulation of backlogs.
Services industry employment growth increased at its fastest pace in nine months in March.
Prices for US government debt fell, while the dollar rose against a basket of currencies. US stocks were trading lower after Saudi Arabia and its allies launched air strikes on Yemen.
The sturdy jobs and services sector picture is in stark contrast with dour reports on manufacturing, home building, consumer spending and trade, which have suggested the economy has hit a soft patch.
The tepid growth and persistently low inflation could see the Federal Reserve delaying raising interest rates until later this year. The US central bank has kept its short-term interest rate near zero since December 2008.
Atlanta Federal Reserve Bank president Dennis Lockhart said at an investment education conference in Detroit the recent lull in activity was temporary and not a sign that the economy was shifting to slower growth.
The economy added 295,000 jobs in February, marking the 12th straight month that employment gains have been above 200,000, the longest such run since 1994.