November jobless claims dip, factory orders rise
WASHINGTON - A fitful economic recovery is drawing strength from a stabilizing job market and signs that manufacturing will contribute to the rebound.
The latest sign was a government report Thursday that the number of newly laid-off workers filing claims for unemployment benefits fell more than expected last week. And the four-week average for claims, which smoothes out fluctuations, fell for the 16th straight week, to its lowest point since September 2008, when the financial crisis hit with full force.
Further evidence of a gradually healing economy was a report that orders to U.S. factories for big-ticket durable goods rose in November. The overall increase was less than expected. But excluding the volatile transportation category, the gains were twice what economists had forecast.
Strength in November was shown in areas such as orders for machinery, which rose 3.5 percent. Orders for primary metals such as steel grew 1.4 percent. And orders for computers and electronic products jumped 3.7 percent, the biggest gain since February.
"The fourth-quarter recovery in business investment was a bit stronger than we previously feared," Paul Ashworth, an economist at Capital Economics, wrote in a research report.
Still, he added, "Firms still appear to be unusually reluctant to invest, either because of existing spare capacity, uncertainty or lack or credit availability."
Economists are hoping that the fortunes of the manufacturing sector are beginning to rebound after the recession briefly forced two major U.S. automakers - General Motors and Chrysler LLC - into bankruptcy protection earlier this year.
Ashworth of Capital Economics noted that companies are rebuilding their stockpiles of goods - one reason why he predicts GDP will expand at an annualized rate of about 5 percent in the fourth quarter.
The Labor Department said Thursday the number of new jobless claims fell to a 452,000 last week, down 28,000 from the previous week, on a seasonally adjusted basis. That's a better performance than the decline to 470,000 that economists had expected.
Unemployment claims have been falling unevenly since summer. That improvement is seen as a sign that jobs cuts are slowing and hiring could pick up early next year. The fall in weekly claims of 28,000 last week, which followed two smaller weekly increases, shows that the halting improvement continues.
Economists monitor jobless claims as a gauge of the pace of layoffs. Analysts say initial claims need to fall to about 425,000 for several weeks to signal the economy is actually beginning to add jobs.
The government said the number of people continuing to receive regular jobless benefits fell by 127,000 to 5.08 million for the week ending Dec. 12. That figure does not include millions of people who have used up the 26 weeks of benefits typically provided by states and are now receiving extended benefits for up to 73 additional weeks, paid for by the federal government.
The number of people receiving extended benefits jumped to 4.37 million for the week ending Dec. 5, an increase of 141,807 from the previous week. That big rise slows that the problem of high unemployment persists despite a decrease in layoffs.
It also reflects the fact that 38 states are now processing claims for the extension of benefits that Congress approved last month.
The Commerce Department said orders for durable goods edged up 0.2 percent last month, weaker than the 0.5 percent gain economists had expected. But excluding transportation, orders rose 2 percent over the October level, double what economists had forecast.
Demand for commercial aircraft plunged 32.6 percent. And orders for transportation products sank 5.5 percent as demand for motor vehicles and parts edged down 0.2 percent, the weakest showing in five months.
The economy grew at a 2.2 percent annual rate in the July-September quarter, the first growth in the gross domestic product after a record four straight quarters of shrinking GDP. A string of more positive reports is causing analysts to revise up their forecasts for growth in the current quarter to 3 percent or slightly better.
Unless unemployment starts to decline steadily, consumer spending, which accounts for 70 percent of economic activity, could falter. That could jeopardize the fragile recovery from the nation's longest recession since the 1930s.