Jobless Claims, Factory Orders Rise : * Economy: Jump in unemployment ranks is linked to auto industry layoffs. Increased demand for defense items boosts some manufacturers.
Seasonal auto layoffs and other industrial cuts threw nearly half a million workers into the jobless ranks in late November, while a surge in demand for defense goods pushed factory orders higher in October.
The Labor Department reported Thursday that 471,000 people filed initial claims for unemployment in the week ended Nov. 23, a spurt of 57,000 over the previous week.
President Bush, at a news conference, conceded that “economic growth is sluggish at best.”
“People are out of work, and we need to get this country back on its feet, people back on the job,” Bush said, adding that he would make major new economic proposals in his State of the Union address in late January.
The data, especially the Labor Department’s jobless claims report, provided mounting evidence that the U.S. economy is either at a standstill or sinking back into recession.
“It’s not a death spiral,” said David Rolley of DRI-McGraw Hill. “It just means we’re on the bottom. We’ve stalled out.”
“The economy is rapidly spinning its wheels,” added Robert Dederick of the Northern Trust Co., “trying to make up its mind whether it’s going to gather strength or slide back.”
The claims report all but erased the previous week’s decline of 80,000, to 414,000, in the number of new claims. That was seen as a fluke, because it reflected a week in which unemployment offices were closed on Veterans Day.
During the past month, jobless claims--a good but not foolproof gauge of how many people have been laid off in a given week--have averaged 458,000 a week, analysts noted. That’s a worrisome number, they said, especially when compared to the four-week average of August and September, when it was a much more moderate 400,000.
Many economists predicted, before the Labor Department’s report due today on the unemployment rate, that the rate will have climbed to 6.9% or even 7%, up from October’s 6.8%.
If the rate hits 7%, that would match the highest level of the recession, when unemployment hit a five-year high of 7% in July.
The Commerce Department, meanwhile, said factory orders increased 1.9% in October to a seasonally adjusted $242.12 billion. But much of that gain came from a 55% bounce in the volatile Pentagon sector and reflected little improvement in the sagging consumer market so critical to the economy.
And even with the military boost, demand for factory products in October was below the level reached in July, when manufacturing was viewed as one of the few bright spots in the economy.
The 1.9% rise in factory orders, after declines in September and August of 2.3% and 2%, was strongly influenced by a 56% jump, to $8.6 billion, in defense orders.
The figures support the widely held view that economic production was gearing down entering the final three months of this year after a spurt of growth in the spring and summer that benefited the industrial sector.
The Commerce Department reported that, excluding defense items, orders were up 0.6% in October after a 0.1% fall in September.
Although defense orders make up a small proportion of the total, they are highly volatile because they entail large orders that are placed irregularly.
Factory Orders Rise
Total new orders in billions of dollars, seasonally adjusted
Oct., ‘91: 242.1
Sept., ‘91: 237.7
Oct., ‘90: 255.0
Source: Commerce Dept.
