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Tags: jobless | claims | labor | market

Jobless Claims Fall More Than Expected to 268,000

Jobless Claims Fall More Than Expected to 268,000

Thursday, 26 May 2016 08:47 AM EDT

Orders for long-lasting U.S. manufactured goods surged in April on strong demand for transportation equipment and a range of other products, but continued weakness in business spending plans suggested the manufacturing rout was far from over.

Other data on Thursday showed new applications for unemployment benefits fell more than expected last week, indicating the economy was gaining momentum after growth braked sharply in the first quarter.

"Equipment investment will remain weak for some time. But GDP growth will nevertheless accelerate, driven by stronger consumption growth," said Paul Ashworth, chief U.S. economist at Capital Economics in Toronto.

The Commerce Department said orders for durable goods, items ranging from toasters to aircraft meant to last three years or more, jumped 3.4 percent last month after increasing 1.9 percent in March.

But non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, fell 0.8 percent after slipping 0.1 percent the prior month. These so-called core capital goods orders have now declined for three consecutive months.

Economists polled by Reuters had forecast durable goods orders rising only 0.5 percent last month and core capital goods orders increasing 0.4 percent.

The dollar slipped against a basket of currencies after the data, while prices for U.S. government bonds held gains.

Manufacturing, which accounts for 12 percent of the economy, is struggling with the lingering effects of the dollar's past surge and sluggish overseas demand.

Spending cuts on capital projects by oilfield service firms like Schlumberger and Halliburton, whose profits have been hurt by the recent oil price plunge, and efforts by businesses to reduce an inventory bloat are also a drag.

Still, the rise in durable orders last month was another signal that the economy was gaining steam after growth slowed to a 0.5 percent annualized rate in the first quarter.

That view was supported by a separate report from the Labor Department showing initial claims for state unemployment benefits declined 10,000 to a seasonally adjusted 268,000 for the week ended May 21, near their cycle lows.

Economists had forecast initial claims falling to 275,000 in the latest week. Claims have now been below 300,000, a threshold associated with a strong job market, for 64 straight weeks, the longest stretch since 1973.

So far, reports on retail sales, housing and industrial production have offered a favorable view of the economy at the start of the second quarter.

Despite the persistent weakness in business spending, the steady stream of fairly upbeat reports could give the Federal Reserve ammunition to raise interest rates again next month.

Minutes from the Fed's April 26-27 policy meeting, published last week, showed most officials considered it appropriate to raise rates in June if data continued to point to an improvement in second-quarter growth.

The rise in durable goods orders last month was led by an 8.9 percent jump in bookings for transportation equipment. Orders for civilian aircraft soared 64.9 percent. Motor vehicles and parts orders increased 2.9 percent.

There were increases in orders for fabricated metal products, computers and electronic goods, and electrical equipment, appliances and components. Orders for machinery fell 1.9 percent and demand for primary metals was unchanged.

Shipments of core capital goods - used to calculate equipment spending in the gross domestic product report - rose0.3 percent, reversing March's 0.3 percent drop.

Last month, there was a further decline in manufactured durable goods inventories, a good sign for the sector's future prospects. Unfilled orders increased 0.6 percent after being flat in March. Durable goods shipments rose 0.6 percent following two consecutive months of declines.

© 2023 Thomson/Reuters. All rights reserved.

The number of Americans filing for unemployment benefits fell more than expected last week, moving back to near cycle lows as the labor markets remains healthy and the economy regains momentum after stumbling in the first quarter.
jobless, claims, labor, market
Thursday, 26 May 2016 08:47 AM
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