Factory Output Up, Jobless Claims Down
Factories hummed with new business in January after an end-of-year slump, and jobless claims fell again last week, according to government reports released Thursday that signal manufacturing strength and a tighter job market ahead.
The reports came after Federal Reserve Board Chairman Alan Greenspan warned repeatedly in recent days that the central bank stood ready to raise interest rates, if necessary, in a bid to ward off inflation.
The Commerce Department said factory orders rose 2.5% in January to a seasonally adjusted $323.2 billion--the best performance in four months--after falling 1.5% in December and 0.5% in November.
Shipments of finished products and backlogs of unfilled orders both also rose, signs that industrial activity will stay strong in coming months.
“The industrial sector is on a very sustainable trajectory,” economist Bruce Steinberg at Merrill Lynch & Co. said, noting that he did not see pressures developing that might push prices and wages up too quickly.
He said some of January’s gain was a rebound from weakness as 1996 ended.
The Labor Department said in a separate report that new jobless claims fell 6,000 last week to 310,000. The four-week moving average, seen as a better gauge of jobless trends since it smooths out weekly fluctuations, fell to its lowest level in nearly eight years, also at 310,000.
Marilyn Schaja, an economist with Donaldson, Lufkin & Jenrette Securities Corp. in New York, noted that it was the eighth straight week that the moving average fell and “clearly indicates a tight labor market.”
Other indicators point to the same. Recent data show the number of those voluntarily leaving their jobs is on the rise.
There are a number of ways of gauging voluntary job leavers, which economists call the “quit rate.” The most widely cited indicator is the percentage rate of job leavers of total unemployed, which rose to 12.3% in January from 11.7% in December. In January 1995, for example, the rate was 9.3%.
The rate has been on the rise for three straight months, after staying near the 11% range for much of 1996.
In a separate report Thursday, the nation’s largest retailers saw modest sales gains in February as consumer optimism about the U.S. economy ignited some spending during the typically slow month for merchants.
The Salomon Bros. retail index, the investment firm’s barometer of sales performance, rose 4.7% last month after a 7.3% gain in January. In February 1996, the index rose 5.2%.
