Economy’s slump could last through summer

WASHINGTON – The economy’s spring slump appears to be extending into the summer, according to a slew of mixed data released Thursday.

Layoffs are rising. Manufacturing activity in the Northeast expanded only slightly in July after contracting in June. Economic growth is projected to pick up this fall, but not enough to give businesses confidence to hire and speed the recovery.

The economy could lapse even further if Congress and the Obama administration fail to reach an agreement on raising the borrowing limit in the coming week.

But for the moment, traders on Wall Street don’t seem worried. Stocks soared Thursday on news that European governments were moving toward agreement on an aid package for Greece. The Dow Jones industrial average closed 152 points up for the day.

Economists are less optimistic. They are forecasting a third straight month of feeble hiring in July, based on the latest round of data. Expectations are the economy added somewhere in the range of 50,000 to 100,000 net new jobs this month.

That’s not enough to keep up with population growth and far below what is needed to lower the unemployment rate, which was 9.2 percent last month.

“We’re going to see improvement, but right now nothing’s improved yet,” said Joshua Dennerlein, an economist at Bank of America Merrill Lynch.

Applications for unemployment benefits rose last week to a seasonally adjusted 418,000, the Labor Department said. They have now topped 400,000 for 15 straight weeks. Applications had fallen in February to 375,000, a level that signals healthy job growth.

The Philadelphia Federal Reserve Bank said its manufacturing index rose to 3.2 in July, a sign that the sector is growing again. It had contracted in June for the first time in nine months. The index dropped to negative 7.7, the lowest level in two years.