Data on Thursday indicated manufacturing may continue leading growth for a while. Analysts said recovery should then shift from government stimulus and stockpiling to consumers once hiring picks up in the factory sector.

There is plenty of slack to be taken up on the jobs front.

Initial claims for state unemployment benefits rose 24,000 to a seasonally adjusted 484,000. A Labor Department official attributed the spike to a backlog in applications during the Easter holiday and saw no unusual economic factors at play.

"With the manufacturing sector accelerating, it's likely the overall economy will continue to grow at an above trend growth for the time being," said Zach Pandl, an economist at Nomura Securities International in New York.

"The handoff from fiscal policy to underlying domestic growth should happen at some point this year." Expansion in manufacturing was highlighted by the New York Federal Reserve's "Empire State" general business conditions index which rose to a six-month high of 31.86 in April from 22.86 last month. Markets had expected a reading of 24.

Separately, the Philadelphia Federal Reserve Bank's business activity index rose to the highest level in four months during April. The rise in the index to 20.2 from 18.9 the prior month was a touch above market expectations.

While a report from the Federal Reserve showed overall industrial production rose only 0.1 percent in March as heating needs fell, manufacturing output increased 0.9 percent in March, led by widespread gains among durable goods industries.

US home foreclosures jumped 19 percent to a monthly record in March, driving first-quarter actions up 7 percent from the prior quarter, RealtyTrac said late on Thursday.

Utilities output fell in March as heating demand fell, slowing industrial production last month. Capacity utilization, a closely watched measure of slack in the economy, rose to 73.2 percent from 73.0. That was still 7.4 percentage points below the 1972-2009 average.