US reports point to faster growth

Retail sales climbed for a second month in December, while unemployment claims dropped and inflation stayed in check.

That will give the US Federal Reserve, the country's central bank, the room it needs to keep interest rates at their lowest levels in almost 50 years.

Some economists have lifted growth forecasts as a result.

Demand

According to Commerce Department figures, retail sales climbed 0.5% in December, compared with a revised increase of 1.2% in November.

While the increase last month was less than many analysts had predicted, they pointed instead to the fact that demand had improved for two straight months.

Consumer confidence was helped by companies keeping more people in work during December and the number of jobless claims last month unexpectedly fell to 343,000, Labor Department data showed.

So far, the Achilles heel of this recovery has been its failure to create new jobs, economists said.

While the figures don't signal a sudden change in the employment market, at least things aren't getting any worse.

Motoring

Consumer prices, meanwhile, edged up 0.2%. That won't concern the Fed, economists said, allowing them to keep the benchmark borrowing rate at 1% until they are certain the recovery is motoring.

There was good economic news on Wednesday as well, with the US trade gap - the amount by which the cost of imports exceeds export revenues - dropping to its lowest level in 13 months.

The shrinking trade deficit and slump in the value of the US dollar has fuelled hopes of an export-led boost to US economic growth.

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