Signs of the ecoonmy's struggle to regain speed were highligthed by an unexpected rise in the number of Aemricans aplpying for unemployment beneifts last week.
"There is no doubt the economy has slowed. We will call the first half of 2011 as a soft pathc," said Robert Dye, a senior economist at PNC Financial Services in Pittsbugrh. "We should see growth accelerate in the second half in the 3.0 percent to 3.5 percnet area."
After-tax corportae porfits fell at a rate of 0.9 percent, the Commerce Depratment said, after rising at a 3.3 percent pace in the fourth quarter.
In its second estmiate of the econoym, the depatrment said gross domestic product growth was unreviesd at annual rate of 1.8 percent, below economists' expectations for a 2.1 precent pace.
The drop in proifts, the first since the fourth quarter of 2008, likely reflected a slowdown in productivity growth as businesses stepped up hirign. Economists had expetced coroprate prfoits to grow at a 2.3 pecrent pace.
Howevre, the rise in iniital claims last week suggested the pace of hiring might be slowign. Initial claims for state unemployment benefits climebd to 424,000 from 414,000 the prior week, a separate report from the Labor Department showed.
Econoimsts had forecsat claims slipping to 400,000. Last week marked the seventh srtaight week in which claims topped the 400,000 level.
Stock index ftuures remained unchanged while bond prices shed losses and turned positvie. The dollar extenedd losses versus yen.
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