Jobs picture brightens

WASHINGTON – After years of bad news begetting more bad news, the American economy may finally be building momentum in the other direction.

A flurry of economic reports issued Thursday captured some solid recent gains: Companies are hiring. Factories and department stores are busier. Americans are buying more cars.

And the stock market just ended its best February in 14 years.

But Thursday’s reports also showed that a healthier job market hasn’t translated into bigger paychecks for workers or a surge in consumer spending. And the progress of the past few months is now threatened by a rise in gasoline prices.

On one hand, analysts say the economy may be on the verge of a “virtuous cycle,” in which stronger hiring fuels more consumer spending, which leads to even more hiring and spending.

On the other hand, even months of improvement have yet to demonstrate that the cycle can sustain itself.

“When you get this sort of hodgepodge and not-so-good results, you start to see the true nature of this recovery,” said Sean Snaith, director of the University of Central Florida’s Institute for Economic Competitiveness.

A healthier job market hasn’t produced bigger paychecks or a surge in consumer spending. The housing market is still weak. A European recession threatens to hold back U.S. growth.

Thursday’s reports showed an economy maintaining its growth 2  1/2 years after the official end of the recession: The number of people applying for first-time unemployment benefits fell last week to a four-year low. And automakers, such as Ford and Chrysler, and many retailers, including Target Corp. and Macy’s Inc., reported improved sales for February.

At the same time, the government said consumer spending flatlined in January after adjusting for inflation. Manufacturing activity grew at a slower pace in February as factories received fewer orders and had to pay more for raw materials. And construction spending slipped in January, the first monthly drop since July.

All that comes even as a strong report this week on consumer confidence helped lift the Dow Jones industrial average past 13,000 for the first time since May 2008. Unemployment has dropped for five straight months, and the economy has generated nearly 2 million jobs over the past year.

Here is a look at some of the reports released Thursday:

• Auto sales: U.S. car and truck sales were the strongest in four years as gas prices drew buyers to smaller cars. Sales rose nearly 16 percent to 1.1 million last month. That’s an annual rate of 15.1 million, the highest since February of 2008. Honda Civic sales were up 42 percent to more than 27,000. Sales of Chrysler’s 200 midsize car hit more than 9,700, four times the sales from a year earlier.

• Manufacturing: Manufacturing activity grew more slowly in February as U.S. factories received fewer new orders and paid higher prices for raw materials.

The Institute for Supply management, a trade group of purchasing managers, said Thursday that its manufacturing index fell last month to 52.4 from 54.1 in January.

The reading was the lowest since November. Still, any reading above 50 indicates expansion.

New orders increased, but at a far slower pace than the month before. Production and employment also grew more slowly.

Exports increased sharply, a sign that Europe’s debt crisis has not yet dampened overseas sales by U.S. factories as many had feared.

U.S. factory activity has expanded for 31 straight months, according to the index.

• Retail: Americans stepped up their spending in February, boosting sales at many stores.

As merchants reported their monthly sales figures Thursday, a diverse group including Target and Macy’s reported sales gains that exceeded Wall Street estimates. Even Gap Inc., long mired in a sales slump, posted an unexpected increase.

The figures, based on revenue at stores opened at least a year, are considered an indicator of a retailer’s health. Only a small group of retailers report monthly sales figures. But industry watchers say those merchants that do post monthly numbers offer a snapshot of consumer spending, which accounts for more than 70 percent of all economic activity.

Overall, merchants on Thursday reported a 6.7 percent increase for February compared with the year-ago period, according to the International Council of Shopping Center’s tally of 21 retailers. That followed a more modest increase of 2.7 percent in January. February’s results marked the biggest gain since June when the index was up 6.9 percent as shoppers took advantage of deep promotions on summer merchandise.

• Unemployment benefits: The number of people seeking unemployment benefits fell slightly last week to the lowest point in four years.

A seasonally adjusted 351,000 people sought unemployment aid, down from 353,000 the previous week, the Labor Department said Thursday. That matches the four-year low reached three weeks ago.

The improving numbers show that steadily fewer people are being laid off and suggest that some companies are stepping up hiring.

The four-week average of applications, which smooths out weekly fluctuations in the data, also fell last week, to 354,000. That’s also the lowest in four years.