3rd-Quarter GDP Expands 3.3%; Prices Still Muted

Weaker exports to Asia’s faltering economies helped restrain U.S. expansion during the third quarter, according to a Commerce Department report released Wednesday, though there were no signs of abrupt slowing ahead.

The gross domestic product, the broadest measure of national economic activity, expanded at a still-healthy 3.3% annual rate from July through September, though that was down from the 3.5% estimate of a month ago.

Prices remained muted, rising at the slowest rate in five years. The last time prices gained more slowly was in the 1960s, the department said.

Separately, the department reported a decline in October orders for costly manufactured goods, as demand for virtually every category of long-lasting durable products--except transportation--faltered after a strong September.

Total new orders fell 0.3% last month to a seasonally adjusted $185.92 billion, the first drop in five months, after a slim 0.1% September rise.

There were fewer orders last month for industrial machinery, which includes computers, and for primary metals, defense items and electronic goods. Shipments of finished products also softened.

“It is one piece of data pointing to more weakness in manufacturing activity going forward,” said Marilyn Schaja, money market economist at Donaldson Lufkin & Jenrette Securities Corp. in New York. “The Fed is on hold. This number helps them keep monetary policy steady.”

In a fresh measure of the durability of the economy’s long-running expansion, however, the Labor Department’s weekly jobless data showed initial claims for jobless benefits plummeted 31,000, to 303,000, in the week ended Saturday.

Job markets remained robust. The Conference Board, a New York-based business research group, said Wednesday that its help-wanted ad index eased 3 points in October, to 86.0, but that hiring was brisk.

Personal spending--the fuel for two-thirds of U.S. economic growth--shot up at the fastest rate in 5 1/2 years, rising at a 5.8% annualized rate after gaining an annualized 0.9% in the second quarter.

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Gross Domestic Product

Percentage change from previous quarter, annualized rate: 3rd quarter: +3.3% (1997)

Durable Goods

New orders, in billions of dollars, seasonally adjusted: Oct. $185.9

Source: Commerce Department