(Reuters) – Home resales hit a 3-1/2-year high in May and factory activity in the Mid-Atlantic region rebounded this month, backing the Federal Reserve’s view that risks to the economy have diminished.

While other data on Thursday showed more Americans than expected filed new claims for unemployment benefits last week, the increase was not big enough to signal a material shift from the recent pace of moderate job growth.

Higher taxes and deep government spending cuts that took effect this year had raised fears that the economy could slow abruptly, but the recovery appears to moving to firmer ground.  Read more