Initial Claims for Jobless Benefits Drop
The number of U.S. workers filing new claims for state unemployment benefits fell for the fifth week in the last six, and business equipment orders rose in October for the first time since January, signs the economy is digging its way out of recession.
Initial jobless claims fell to 475,000 in the week ended Saturday from 493,000 the prior week, the Labor Department said. Claims have fallen since surging to a nine-year high in the last week of September, when terrorist attacks led to job cuts. Factory orders rose 7.1% in October, reflecting a jump in bookings for computers, automobiles and weapons, the Commerce Department said.
Still, the level of claims suggests unemployment will keep rising in coming months. The government is expected to report today that the jobless rate rose in November to a 51/2-year high of 5.6% and businesses cut 200,000 jobs.
U.S. worker productivity for the third quarter was revised down because of the worst quarterly contraction since the 1990-91 recession. The measure of how much an employee produces for each hour worked rose at a 1.5% annual rate between July and September, compared with 2.7% reported last month. Productivity grew at a 2.1% pace in the second quarter.
Not since 1957-58 has productivity increased during the first two quarters of a recession. The strength in productivity reflects shrinking payrolls at companies such as Cisco Systems Inc. and Sears, Roebuck & Co., and also streamlining by businesses such as Kmart Corp.
Factory orders are rebounding from the disruptions of the September terrorist attacks and after a decline in inventories encouraged some auto makers and aircraft manufacturers to restock. Earlier this week, General Motors Corp. said it plans to boost production because of increased sales.
“We’re seeing orders coming in better than we would’ve expected in a very negative business environment,” said Lara Rhame, an economist at Brown Bros. Harriman in New York.
Defense orders, including jets, accounted for much of the increase. Orders excluding defense rose 3.3% after falling 6.8% a month earlier, the Commerce Department said.
Orders for non-defense capital goods excluding aircraft, a barometer of businesses’ plans to invest in new equipment, rose 6.1% in October after falling 9.9% a month earlier. The increase was the first since January and the largest since June 2000. Computer orders surged 31.5%, the first increase in a year.
Among durable goods, orders for transportation equipment rose 38.9% in October after falling 16.3% the previous month. Orders for commercial aircraft rose 49.3% after falling by the same amount in September. Orders for motor vehicles and parts rose 4.6% after an 8.1% decline in September.
Meanwhile, the Labor Department also said the number of people still on jobless rolls plunged to 3.638 million in the week ended Nov. 24 from 3.987 million the prior week. The decline was the biggest since the week ended Jan. 1, 1983, and followed a surge to an almost 19-year high a week earlier.
