There are a few bright spots in the recession-hit US economy, reports released on Thursday showed, but hopes of quick recovery were dashed as an increasing number of Americans signed up for jobless benefits.
Orders for durable goods posted the biggest rise on record in October and sales of new homes climbed for a second month in a row, offering hope that parts of the economy are picking up steam after grinding to a halt following the Sept. 11 attacks.
However, the durable goods report was skewed by aircraft and defense orders. And what good news there was got overshadowed by jobless claims, which jumped in the latest week, indicating it is still too soon to say the economy is in recovery.
"I think celebration is premature," said Sung Won Sohn, chief economist at Wells Fargo. "The economy is not on a solid footing yet. The labor market is clearly not improving."
Markets mixed
Markets took a mixed view on the reports. Stocks focused on the good and rallied on the durables number while Treasury bonds staged a sharp surge as they zeroed in on the gloomy jobless claims number. The woes of energy trader Enron Corp claimed a good portion of market attention as well.
Thursday's data follow a round of gloomy reports, which have dampened rebound hopes after surprisingly strong post-Thanks-giving sales prompted US Treasury Secretary Paul O'Neill to declare the economy in a "recovery phase."
On Monday, a panel of economists that officially dates US business cycles declared the economy has been in recession since March. Then on Tuesday the Conference Board, a private research group, shocked markets with soft consumer confidence data. The bleak news continued when on Wednesday the Federal Reserve said conditions around the country remained sluggish in late October and early November.
According to Thursday's report, the number of workers filing initial jobless claims for the week ended Nov. 24 rose 54,000 to 488,000. That was well above the 448,000 economists in a Reuters poll were expecting for the week -- one which would typically see light filings because of the Thanksgiving holiday.
The number of so-called continued claims rose by 301,000 to 4.02 million for the week ended Nov. 17, the biggest one-week jump in 27 years. The number of continued claims was at its highest level since Dec. 25, 1982, when it hit 3.82 million.
Consumer spending
"Until we seen some convincing signs the rate of job losses has settled down, you have to be concerned about consumer spending going forward. If you are concerned about consumer spending it is hard to talk about recovery," said Anne Parker Mills, senior economist at Brown Brothers Harriman in New York.
In a separate report, the Commerce Department said the value of new orders for costly durable goods last month rose 12.8 percent to US$184.8 billion, led by huge increases in orders for aircraft and defense capital goods. This was the largest gain since the Commerce Department began records in March 1992 and far exceeded analyst expectations of a 2.1 percent gain.
Economists said they believed the overall durables orders figure was boosted when aircraft maker Lockheed Martin booked some of a US$19 billion initial-production contract for the Joint Strike Fighter aircraft for the US military.
The Commerce Department also reported that sales of new US homes rose 0.2 percent to an annual rate of 880,000 units last month, also better than expectations.
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