Sat, Feb 27, 2010 page10

• Weak US data raise concern about recovery

  • REUTERS
  • • 
    • 
    • 

  Demand for a wide range of US manufactured goods unexpectedly fell last month, while new applications for jobless benefits rose again last week, the latest data to suggest a step back in the economy’s recovery.

  The Commerce Department said on Thursday durable goods orders, excluding transportation, slipped 0.6 percent last month, but overall orders jumped as civilian aircraft bookings surged 126 percent.

  Separately, the number of people filing initial claims for jobless aid rose for a second straight week last week, topping analysts’ expectations, although the figures were likely affected by snowstorms that blanketed parts of the country.

  “Rising jobless claims and weaker orders suggest the economy is retrenching in the first half of the first quarter,” said Chris Low, chief economist at FTN Financial in New York.

  Still, he said the data did not suggest the start of a “double dip” recession.

  “Some back-and-fill is standard operating procedure in recoveries,” Low said.

  The weak reports combined with threats from rating agencies to downgrade Greece’s sovereign debt to hand US stocks their biggest one-day fall in three weeks. Prices for US government debt soared, while the dollar neared a nine-month high against the euro.

  The data, coming in the wake of reports showing a drop in consumer confidence and a plunge in new home sales to a record low last month, supported views economic growth would slow in the first quarter after a brisk 5.7 percent pace in the October-to-­December period.

  “The fourth quarter was supported by a swing in inventories. That adds to growth, but it’s not something that can be sustained over time,” said Andrew Gledhill, an economist at Moody’s Economy.com in West Chester, Pennsylvania.

  “First quarter [growth] will be more dependent on how the US consumer is doing and what kind of production levels manufacturing is doing. It’s more the underlying economy, less the kind of temporary technical factors,” he said.

  The economy resumed growth in the second half of last year after the worst downturn since the 1930s. However, employment is lagging the recovery and weekly jobless claims have failed to hold retreats made since mid-November.

  The latest report from the Labor Department on Thursday showed first-time filings for state unemployment benefits rose to 496,000 last week from 474,000 a week earlier.

  An analyst with the department said snowstorms may have kept some workers sidelined and could have delayed the processing of claims, leading to the unexpectedly large spike.

  While economists remained optimistic the economy would start to create jobs in the first half of the year, they worried the continued rise in jobless filings could be a sign of a shift in the downward trend that layoffs had displayed.

  Federal Reserve Chairman Ben Bernanke also acknowledged the harsh weather could negatively impact employment data, but he said he expected the effects to be temporary.

  “We will have to be particularly careful about not over-interpreting the data,” he told a congressional committee.

  Since the start of the recession in December 2007, payrolls have dropped every month, except in November last year when employers added 64,000 jobs.

  Durable goods orders, excluding transport, were pulled down last month by the biggest decline in a year in orders for machinery. Economists had expected a 1 percent gain. Disappointment was tempered by an upward revision that showed non-transport orders increased 2 percent in December.

  Last month, motor vehicles and parts orders saw their largest fall in eight months, and a closely watched gauge of business spending dropped 2.9 percent after a 3.3 percent rise in December.

  Shipments, which go into the calculation of GDP, slipped 0.2 percent. They rose 2.4 percent in December.

  Some analysts drew comfort from gains in some categories, in particular large orders for computers and electronic products, pointing to increased business investment in equipment and software.

  “Unfilled orders increased for the first time since September 2008 and inventories did not fall for the first time since December 2008,” said Tony Crescenzi, portfolio manager at PIMCO in Newport Beach, California. “In this context these data are not as bearish for the economy as the core data suggest.”
• Most Popular

  • 1

    China preparing to invade Taiwan: deputy foreign minister

  • 2

    Jakarta puppet ban threatens city’s buskers

  • 3

    FDA approves shrimp imports from ally Belize

  • 4

    MRT extension linking New Taipei and Taoyuan set to start in 2026

  • 5

    Taiwan expects final US tariff rate soon: official