Jobless Claims Fall, Still Volatile Due to Auto Jobs
By Staff Reporter | Jul 26, 2012 11:07 AM EDT
(Reuters) - The number of Americans filing new claims for jobless benefits fell last week to near a four-year low but an unusual pattern for summer factory shutdowns kept hopes in check that the weak labor market was improving.
Other data on Thursday showed new orders for long-lasting U.S. manufactured goods rose in June although a gauge of planned business spending plans dropped, pointing to a slowdown in factory activity.
Economists said the two economic reports did little to change the view that the economy was stuck in a rough patch.
"They both look good on the surface, but I don't think there's really anything to get excited about," said Stephen Stanley, an economist at Pierpont Securities in Stamford, Connecticut.
The labor market has suffered three months of sub-100,000 job growth as the economy slowed amid a cloud of uncertainty spawned by fears of sharp contraction in fiscal policy and debt problems in Europe.
Last week, initial claims for state unemployment benefits dropped 35,000 to a seasonally adjusted 353,000, the Labor Department said. That was a much sharper drop than economists expected.
The reading for jobless claims has been volatile this month because of the timing of the annual auto plant shutdowns for retooling. The number of new claims had touched a four-year low in the July 7 week at 352,000. One measure that tries to smooth out this volatility, the four-week moving average, fell 8,750 last week to 367,250.
"The good news there is on average over the last four weeks the number is improving," said Art Hogan, managing director of Lazard Capital Markets in New York.
This year, automakers are carrying out fewer temporary plant shutdowns, throwing off the model the department uses to smooth the data for typical seasonal patterns.
A Labor Department official said they were still experiencing volatility related to the auto layoffs that usually happen at this time of year. Otherwise, the data had few blips.
Federal Reserve Chairman Ben Bernanke told lawmakers last week that the U.S. central bank, which last month expanded its efforts to spur the economy, would take additional action if officials concluded no progress was being made towards higher levels of employment.
In a separate report, the Commerce Department said durable goods orders increased 1.6 percent in June as demand for aircraft surged. That was also higher than Wall Street economists expected.
Economists polled by Reuters had forecast orders for durable goods, items from toasters to aircraft that are meant to last at least three years, rising 0.4 percent.
Factoring out transportation, new orders dropped 1.1 percent.
U.S. stock index futures added to gains, and U.S. Treasuries prices extended price declines.
Still, details of the report were generally weak, with declines in new orders for computers, electrical equipment and appliances and machinery.
Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, fell 1.4 percent after increasing 2.7 percent May.
Economists had expected this category to rise 0.6 percent after a previously reported 2.1 percent increase the prior month.
Shipments of non-defense capital goods orders excluding aircraft, used to calculate equipment and software spending in the gross domestic product report, increased 1.2 percent after rising 1.1 percent in May.
The increase suggests spending on equipment and software grew in the second quarter, but probably nowhere near levels seen in 2011.
The government is expected to report on Friday that the economy grew at a 1.5 percent annual rate in the second quarter, according to a Reuters survey, slowing from the 1.9 percent rate in the prior three months.
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