Economic Rebound Slow to Take Hold, Data Show

The number of Americans lining up to claim unemployment benefits surged unexpectedly last week and factory orders tumbled in April, reports Thursday showed, indicating the economic recovery is shaky.

The Labor Department said the number of people applying for initial unemployment aid rose by 16,000 to 442,000 in the May 31 week, its highest level in more than a month.

Analysts were expecting claims to drop to 420,000 from a revised 426,000 for the previous week.

The less volatile four-week moving average of claims also increased, to 430,500 from 427,500 the previous week.

“The labor market continues to struggle,” said a report by David Rosenberg, chief North American economist at Merrill Lynch. “Companies remain hesitant to hire.”

Today’s employment report for May will provide a more comprehensive picture of the jobs market. Analysts are expecting a drop of 39,000 for nonfarm payrolls, after a decline of 48,000 the previous month.

There also was disappointing news in the manufacturing sector. The Commerce Department said April factory orders sank 2.9%, worse than forecasts for a drop of 1.5%.

The report showed sharp declines in demand for machinery, transportation and electrical equipment.

Orders for computers and electronic products rose a modest 0.3%, but that followed a much faster 2.4% increase the previous month.

Analysts said more recent data painted a better picture.

“These are April data and the more current data from the [Institute for Supply Management] would suggest that perhaps manufacturing is stabilizing at a low level,” said Paul Kasriel, chief economist at Northern Trust.

Monday’s report by the Institute for Supply Management showed a sector rebound in May. Its index of manufacturing rose to 49.4 from 45.4 in April, beating forecasts for a rise to 48.6.

And a leading manufacturing group, the National Assn. of Manufacturers, said last month that it was seeing signs of recovery, helped by a weaker dollar, low inventories, better credit conditions, lower energy prices, spending and tax cuts.