Latest Data Hint at a Wobbly Recovery

The number of Americans claiming unemployment benefits rose last week, and manufacturers’ new orders fell sharply in August, the government said Thursday in reports showing a wobbly economic recovery.

The Labor Department said filings for state unemployment benefits rose by 13,000 to 399,000 in the week ended Saturday. The level was slightly above the expectations of Wall Street analysts.

The increase was partially attributed to the effects of Hurricane Isabel, which caused many claims processing offices to close the previous week, preventing people from filing.

In a separate report, the Commerce Department said factory orders dropped a larger-than-expected 0.8% to $327.8 billion in August, led by a 2.3% drop in transportation-related orders. Orders for durable goods -- items meant to last three or more years -- were revised to a 1.1% decline from the 0.9% drop reported last week.

Commenting on the claims report, Scott Anderson, senior economist with Wells Fargo in Minneapolis, said jobs are still being cut “in a lot of sectors.”

“The longer we have job cuts, the longer we’ll be in a hold pattern,” he said.

Financial markets took Thursday’s reports in stride, though. Investors remained cautious in advance of the Labor Department’s payrolls report for September, to be released today.

In August, payrolls dipped by 93,000 and the unemployment rate stood at 6.1%. The U.S. economy grew at a 3.3% annual rate in the second quarter, and economists believe it may have expanded at an even faster pace in the current quarter. But until job growth returns, analysts are cautious about the economy’s prospects further ahead.

In Thursday’s factory report, orders for July were revised up slightly, to a 2% gain.

The August decline was the first since April, when orders slid 2.6%, and was steeper than Wall Street forecasts of a 0.2% drop.

U.S. manufacturing has been among the sectors hardest hit by the sluggish economy. Companies have been slow to invest in new plants or equipment, or hire new workers, because they have excess production capacity.

The manufacturing sector has given off conflicting signals about its health in recent weeks. The Federal Reserve said U.S. industrial production gained a smaller-than-expected 0.1% in August. A survey released Wednesday by the Institute for Supply Management showed factory activity grew in September but at a slower pace.