Jobless Claims Drop, Factory Orders Strong

A big drop in jobless claims and robust factory orders reported by the government Thursday depicted an economy running at full speed as it enters what would be its eighth year of expansion.

The Commerce Department said orders for goods produced by factories rose in January as demand for aircraft recovered from a slump at the end of last year. The 0.5% gain to $337.4 billion compared with a 2.6% drop in December.

Excluding the typically volatile transportation sector, however, factory orders declined 0.2% in January, the Commerce Department said.

“The numbers are still indicating a healthy manufacturing sector,” said Anthony Chan, chief economist at Banc One Investment Advisors in Columbus, Ohio. “But moving forward, this sector is obviously going to slow because of Asia.”

Separately, the Labor Department said the number of people filing first-time claims for state unemployment benefits in the week ended Feb. 28 dropped by 16,000 to 304,000. The fall exceeded economists’ forecast of 316,000 claims.

“The job market is very robust,” said Veronika White, an economist for First Union Corp. in Philadelphia. “Anything below 325,000 on the initial claims indicates a very, very strong labor market.”

The agency added that continuing jobless claims in the week ended Feb. 21 plunged by 103,000 to their lowest level in more than eight years.

“Consumers understandably feel very confident,” said John Williams, chief economist at Bankers Trust Co. in New York. “The economy is full of vitality.”

Evidence of that could be found in the February reports from U.S retailers. Sales at stores open at least a year--a measure used because it excludes the effects of opening, remodeling or closing stores--rose by a greater-than-expected 5.9% last month, based on the average of about 60 retailers surveyed by analyst Richard Baum of Goldman Sachs & Co.

Sales at stores open at least a year rose because of El Nino, which has altered seasonal weather worldwide, analysts said. Sales were helped by warmer temperatures in major metropolitan areas of the Northeast, Midwest and Southeast.

Discount stores reported that consumers were buying merchandise for outdoor activities and yard work thanks to the warmer weather. Wal-Mart Stores Inc. led with a gain of 9.8%, beating expectations of 6.5%.

Demand for apparel was especially strong, boosting sales at Gap Inc. and The Limited Inc. Even Kmart Corp., which has struggled with its apparel, said clothing sales were up for the month.

In a separate report, the outplacement firm Challenger, Gray & Christmas Inc. said that while layoffs rose to 43,919 in February, up 8% over the 40,480 registered one year ago, job cuts were 39% below January’s total of 72,193.

Job cuts totaled 221,646 from November to February, averaging 55,412 layoffs per month. The monthly average was up 47% from the same period a year ago, the report said.

“Luckily for job seekers, U.S. companies are currently creating more jobs than they are cutting,” said John A. Challenger, executive vice president at the firm.

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Factory Orders

New orders, in billions of dollars, seasonally adjusted:

Jan.: $337.4

Source: Commerce Department