2 Reports Help Ease Recession Concerns
Worries about a double-dip U.S. recession faded Thursday as government reports showed businesses splurging on new equipment in April and fewer workers signing up for unemployment benefits last week.
The Commerce Department said new orders for durable goods shot past expectations last month, boosted by a surge in demand for autos and solid gains in computer equipment and machinery. Meanwhile, the number of Americans lining up for the first time to claim state jobless benefits fell in the latest week.
The news is unlikely to have any near-term effect on Federal Reserve policymaking. Analysts said the Fed probably will focus more on the next employment report, due June 7, for evidence the labor market is improving. U.S. central bank policymakers next meet June 25 and 26 to set interest rates.
The Commerce Department said orders for durable goods climbed 1.1%, beating analysts’ expectations for a 0.4% increase. Leading the charge was a 12% gain in auto orders, the largest in more than three years.
In a sign that businesses are starting to invest again after the recession that began in March 2001, orders of computer and electronic products climbed 2.5%, the sharpest gain since October. Machinery orders were up 4%.
Business spending has been highlighted by Federal Reserve Chairman Alan Greenspan as key to a sustained U.S. recovery. The report adds weight to the central bank chief’s comments in April that a revival in this area was beginning.
“The durable goods orders put another nail into the coffin for people who are worried about a double dip,” said Carey Leahy, senior economist at Deutsche Bank Securities in New York. “You’re starting to see positive numbers for capital equipment spending, and if the ISM orders and overall figures are correct, these numbers will continue to strengthen.”
There was good news as well from the Labor Department, which said initial jobless benefits claims for the week of May 18 fell 9,000 to 416,000. Wall Street had been expecting claims to fall to 412,000.
