Jobless Claims Surge; Durable Goods Orders Drop
by The Associated Press
The Associated Press - January 27, 2011
First-time applications for unemployment benefits rose by 51,000 last week, likely boosted by weather-related shutdowns. And orders to factories for long-lasting durable goods fell 2.5 percent in December, pushed down by weak demand for aircraft.
Applications surged to a seasonally adjusted 454,000, the highest level since late October, the Labor Department said Thursday.
A government analyst said that a major reason for the spike was the harsh weather in Alabama, Georgia, North Carolina and South Carolina. That forced many companies to shut down temporarily and also prevented many people from applying for benefits in the previous week.
When state offices, which had closed, reopened and people were able to file applications that pushed the number of requests up sharply, the analyst said.
The four southern states reported a large increases in the number of requests for unemployment benefits. Trucking companies, delivery firms, construction companies and others were affected.
Applications had been declining steadily for several weeks. Requests for unemployment benefits fell sharply in the previous week to 403,000.
Many economists consider data in January less reliable because of seasonal fluctuations.
Applications below 425,000 tend to signal modest job growth. But they would need to dip consistently to 375,000 or below to indicate a significant decline in the unemployment rate.
The four-week average, a less volatile measure, also rose last week by 15,750 to 428,750.
The average had hit a two-year low of 411,250 on Jan. 1. That had suggested companies - operating with lean work forces - may need to add more workers as the economy gains momentum.
Even with last week's increase, economists are optimistic that layoffs will slow and that hiring will pick up this year.
Weak Aircraft Demand Hurts Orders
Meanwhile, a separate report showed that U.S. factories saw a 2.5 drop in orders for their products in December, reflecting weakness in demand for commercial and military aircraft.
The Commerce Department said orders excluding transportation rose 0.5 percent last month following a much stronger 4.5 percent November increase. A key category that signals business investment plans rose for a second straight month.
Orders for commercial aircraft plunged 99.5 percent in December to $24 million after a 59.6 percent November plunge. Orders for commercial aircraft had been $12.4 billion as recently as October. Analysts said they expected a rapid recovery in what is often a volatile category
Overall transportation demand fell 12.8 percent in December as the big decline in commerical aircraft and a smaller drop in military aircraft was offset somewhat by a 1.7 percent increase in orders for motor vehicles and parts.
The 0.5 percent rise in orders outside of transportation was led by a solid 10.6 percent increase in demand for machinery. Orders for communications equipment posted an increse of 3.6 percent.
Demand for nondefense capital goods excluding aircraft, considered a good proxy for business investment plans, rose 1.4 percent in December following an even stronger 3.1 percent November increase.
Manufacturing activity has been expanding since the recession officially ended in June 2009 as U.S. companies have benefited not only from rising domestic demand but stronger export sales. The export sales have been helped by a declining value of the dollar against many major currencies. A weaker dollar makes U.S. products cheaper in overseas markets.
Businesses are anticipating stronger economic activity in 2011. A tax-cut package should give consumers more money to spend, and help businesses expand and modernize. [Copyright 2011 The Associated Press]
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