Economy Continues to Show Signs of Strength, Data Show

U.S. factory orders rose in November, and chain retailers recorded their best holiday sales in six years during December--signs of year-end strength that should keep the economy humming this year.

The government also reported Tuesday that the number of U.S. workers applying for state unemployment benefits declined last week, a sign the job market continues to expand.

First-time jobless claims fell by 22,000 in the week ended Jan. 2 to a seasonally adjusted 350,000, the Labor Department said. The four-week average for jobless claims rose to 327,750 from 322,250 the previous week.

Jobless claims have fluctuated in recent weeks because of seasonal employment, reduced filing days and other circumstances surrounding the Christmas and New Year’s holidays, analysts said.

Meanwhile, orders placed with U.S. manufacturers rose 0.6% in November, the fifth increase in six months, as domestic demand offset weak exports, Commerce Department figures showed. The gain was led by metals, electronic instruments and chemicals. Orders declined for textiles, electronic parts and lighting and wiring equipment. Orders fell 1.7% in October.

U.S. retailers’ sales at stores open at least a year rose 5.6% in December, beating expectations of a gain of as much as 4.75%, according to the Bank of Tokyo-Mitsubishi Ltd., which tracks about 85 retailers. It was the strongest retail performance since 1992.

“As long as demand in the U.S. is as strong as it is, the economy can overcome pockets of weakness in manufacturing,” said Michael Englund, chief economist at Standard & Poor’s MMS in Belmont, Calif.

Combined with a 7% increase in auto sales in December, retail sales as reported by the government next week should post a healthy gain for the month, analysts said, pushing growth for the fourth quarter to 4% or higher.

“Anyone looking for weakness in household spending is going to be holding their breath for a long time,” Englund said.

Federal Reserve Vice Chairwoman Alice Rivlin suggested the economy is performing better than policymakers had forecast. “We all expect that the economy will be slower this year than last year, but we’ve been expecting a slowdown for some time,” she said. “The current statistics have been coming in very strong except for manufacturing.”

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Factory Orders

New orders in billions of dollars, seasonally adjusted:

November: 336.6 billion

Source: Commerce Department