Economy: Durable goods orders jump, jobless claims dip

Martin Crutsinger and Christopher S. Rugaber.

WASHINGTON – Orders to U.S. Factories for long-lasting manufactured goods rose in April by the most since January. But much of the strength came from a surge in the volatile category of commercial aircraft. A key category that tracks business investment fell for a third straight month, a sign that manufacturing remains under stress.

A worker helps to assemble a helicopter at AgustaWestland's aircraft manufacturing facility in Philadelphia.

Demand for durable goods jumped 3.4% after a 1.9% gain in March, the Commerce Department said Thursday. Orders in the closely watched category that serves as a proxy for business investment fell 0.8% after a 0.1% decline in March and a 2.1% plunge in February.

Manufacturing has been under pressure as weak global demand and a strong dollar have hurt exports and falling oil prices have triggered cutbacks at energy companies.

The rise in last month’s orders was led by a 65% surge in demand for commercial aircraft — a category that is extremely volatile from month to month.

Orders for motor vehicles and parts rose 2.9%, rebounding from a 3.2% drop in March. Total orders in all transportation categories were up 8.9%. Excluding transportation, overall orders would have been up a modest 0.4%.

Demand for primary metals such as steel was flat in April while orders for machinery fell slightly. Demand for computers and related products rose solidly, while orders for appliances and other electrical equipment inched up.

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The outlook for U.S. Manufacturing this year remains uncertain. Some economists say they think factories will see a pickup in demand because the dollar has stopped strengthening against other currencies. The global economy also seems to have stabilized after a shaky start to the year.

But other analysts say they worry about how long it may take for manufacturing to bounce back.

The Institute for Supply Management reported that its closely watched gauge of manufacturing activity expanded for a second month in April. The index came in at 50.8, down from 51.8 in March but still above the 50 threshold that signals growth in manufacturing. The March increase followed five months of weak readings that indicated manufacturing was contracting.

Applications for U.S. Unemployment benefits fell last week.

Fewer people sought unemployment aid last week for the second week in a row, the latest evidence that hiring is likely solid.

Weekly applications for unemployment aid dropped 10,000 to a seasonally adjusted 268,000, the Labor Department said Thursday. The four-week average, a less volatile measure, increased to 278,500.

The figures, along with other recent data, suggest the economy is picking up a bit after barely expanding in the first three months of the year. Applications are a proxy for layoffs, so last week’s decline is a sign that companies are confident enough to hold onto their workers. When layoffs are low, hiring is typically steady.

Applications have been below 300,000, a historically low level, for 64 weeks, the longest such streak since 1973.

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About 2.16 million people are receiving benefits, 3.1% lower than a year ago.

The U.S. Economy expanded at just a 0.5% annual rate in the first quarter, after tepid growth of 1.4% in the final three months of last year.

In the past two weeks, however, several reports have suggested growth will rebound in the April-June quarter to nearly 2.5%, some economists forecast.

Sales at retail stores and restaurants jumped in April, evidence that Americans were willing to spend robustly after several months of caution.

And the housing market has perked up: Sales of existing homes rose last month, while sales of new homes soared to the highest level since 2008. Steady hiring and low mortgage rates have encouraged more Americans to take the plunge and buy a home. Housing construction also increased in April.

The improving economy, if sustained, could encourage the Federal Reserve to raise the short-term interest rate it controls for only the second time in nine years, perhaps as early as its next meeting in June or the following one in July.

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