Factory Orders Decline, but so Do Jobless Claims

Manufacturers, hardest hit by the economic slowdown, saw orders fall in June. But in a sign that the rash of layoffs may be easing, new claims for unemployment insurance fell to the lowest level since mid-February.

The government reports released Thursday continue to depict a struggling economy, which has been stuck in low gear for a year.

Orders to U.S. factories declined by a bigger-than-expected 2.4% in June, erasing the 2.2% gain registered in May, the Commerce Department said. Demand fell for military airplanes, cars, computers and industrial machinery. It marked the second decrease in the last three months.

To cope with sagging demand, manufacturers have sharply cut production and capital investment and laid off thousands of workers.

But on a more upbeat note, the number of U.S. workers filing new claims for state unemployment insurance for the workweek ended July 28 fell by a seasonally adjusted 23,000 to 346,000, the third consecutive sharp decline, the Labor Department said. The drop pulled claims down to their lowest level since Feb. 17.

Economists said some of the decline reflects temporarily laid-off automotive and textile workers being recalled to work. This time of year, jobless claims tend to bounce around, particularly as auto plants close temporarily to retool for new models.

“Even accounting for the distortions this time of year, I think the jobless numbers may be signaling that mass job layoffs are behind us,” said economist Richard Yamarone of Argus Research Corp.

The more stable four-week moving average of jobless claims, which smooths out week-to-week fluctuations, also fell last week, to 395,250, the second consecutive drop.

Analysts are awaiting the monthly employment report that the government will release today for a read on the health of the U.S. labor market and the economy as a whole.

In the factory-orders report, demand for transportation products, which include cars, declined 3.3% in June.

Excluding the transportation sector, which tends to swing widely from month to month, factory orders fell 2.3%, the third decrease in that measure in the last four months.

For computers and electronic products, orders fell 1.3%, while orders for machinery declined 1.2%.

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Factory Orders

New orders, in billions of dollars, seasonally adjusted:

June: $334.6 billion

Source: Commerce Department