Three Reports Give Mixed View of U.S. Economy

A hefty rise in January orders for big-ticket factory goods stoked hopes for the struggling U.S. economy, but a jump in jobless claims to a two-month high underscored how the threat of war is hurting investment and hiring, data released Thursday showed.

Another report showed new-home sales suffered their biggest one-month drop in nine years in January, but economists played down the slide, saying it was due to seasonal distortions and was not yet worrying.

Mortgage rates at a four-decade low continue to spur home sales and provide needed sustenance to the economy. Data earlier this week showed sales of existing homes hit a record high in January.

Analysts said the gains in durable goods orders, the biggest in six months, reflected the stronger growth seen in other indicators of factory output last month.

But they also warned that strength probably would fade in February, with the heightened anxiety over a possible U.S. attack against Iraq chilling plans for investment and hiring in the last month.

New orders for durable goods, items that last three years or more, such as refrigerators and aircraft, surged 3.3% to $174.8 billion, much better than the 1.3% economists had forecast. Orders in December were revised to a 0.4% decline from the prior 0.2% dip.

The rebound in the notoriously volatile orders data was widespread. Excluding transportation, orders were up 2.5%, and excluding defense, orders rose 3.6%. Some of that strength was driven by a 10.7% surge in motor vehicle orders.

More important, orders for non-defense capital goods excluding aircraft -- the key focus for trends in capital investment -- rose a big 5.4%. That probably indicates that spending on equipment and software will be up for a fourth straight quarter.

Yet in a worrying sign that the labor market may be deteriorating again, first-time claims for jobless benefits rose to 417,000 in the week ended Feb. 22 from a revised 406,000 the prior week.

The four-week moving average of claims, which irons out the more volatile weekly fluctuations, also rose, to 399,750 from 395,750 in the prior week.

Although new-home sales plunged 15.1% to a 914,000 annual rate in January from 1.08 million in December, economists questioned the reliability of the data. Existing-home sales hit a record 5.57 million annual rate in the same month.