Factory Orders Off 0.3%, Jobless Claims Jump

Factory orders fell in October and claims for jobless pay jumped last week, the government said Thursday, as the White House noted that the economy is slowing after a robust third quarter.

Analysts said the latest reports indicate spreading weakness in the industrial and consumer sectors of the economy, raising the risk that the nearly 5-year-old expansion could come to an end next year.

“We’re not in great shape at the moment, and the fact that we’re five years into an expansion means there’s no reason to expect that we would be,” said economist Daryl Delano of Cahners Economics Inc. in Newton, Mass.

The Commerce Department said total orders received by the nation’s factories edged 0.3% lower to a seasonally adjusted $305.1 billion after rising a strong 1.4% in September and 2.7% in August.

While most of the decline came from a big drop in orders for new aircraft, there were other signs in the report that manufacturing weakened in October, economists said.

Separately, the Labor Department said the number of Americans filing new claims for state unemployment benefits climbed by 14,000 last week to 377,000, much higher than anticipated, pointing to weakness in the job market.

Delano said the greatest concern arises from a possible drop in consumer confidence that could choke off spending and hurt stronger sectors of the economy, such as housing.

Another threat would arise if politicians in Washington failed to agree on spending cuts, possibly putting a big dent in the stock and bond markets, which have been expecting a budget agreement and lower interest rates.

The October drop in factory orders came mostly because of plunging demand for commercial aircraft. A strike by 32,000 workers at Boeing Co., the world’s biggest aircraft producer, since Oct. 6 may have caused customers to hold back on orders.

Excluding transportation, which includes aircraft and new cars, orders rose 1.4% after being flat in September. Nonetheless, there were clear signs of slackening activity in the manufacturing sector. Shipments of finished products fell 0.4% in October while inventories of unsold goods grew--for a 14th consecutive month--by 0.4%.

White House economist Joseph Stiglitz said that recent indicators have been “kind of soft” and point to a slowdown from the third quarter’s sturdy 4.2% annualized rate of growth. “We had every expectation that the fourth quarter would be weaker than the third quarter,” Stiglitz said, but he added that the economy still seems to be growing at about its long-term trend of 2.5% a year.