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US economy remains fragile

Durable goods orders ex-transportation rise 1.1%; jobless claims increase 14,000

A job seeker stops at a table offering resume critiques at a job fair in Atlanta. Initial claims for state unemployment benefits increased 14,000 to a seasonally adjusted 348,000. — AP

Orders for long-lasting US manufactured goods excluding transportation unexpectedly rose last month as did a gauge of business spending plans, but that will probably not change views that factory activity is slowing.

Other data on Thursday showed an unexpected increase in the number of Americans filing new applications for unemployment benefits last week. The run-up in claims, however, likely does not signal a fundamental shift in labor market conditions.

The Commerce Department said on durable goods orders excluding transportation rose 1.1 per cent, the largest increase since May, after falling 1.9 per cent in December.

Economists polled by Reuters had expected this category to fall 0.3 per cent after a previously reported 1.3 per cent decline in December. Durable goods are items from toasters to aircraft meant to last three years or more. The increase last month reflected a surge in orders for computers and electronic products, fabricated metal products and defense capital goods.

Outside these three components, details of the report were weak, with declines in orders for machinery, primary metals, electrical equipment, appliances and components, and transportation equipment.

Data such as industrial production and regional factory surveys have suggested that manufacturing hit a soft patch in recent months.

Part of the slowdown reflects unusually cold weather that has disrupted activity. Manufacturing is also cooling as businesses work through a massive stock of unsold goods that was accumulated in the second half of 2013.

As result, they are placing fewer orders with manufacturers, holding back factory production. In January, shipments of durable goods fell for a second straight month and inventories rose 0.3 per cent after increasing 0.9 per cent in December.

A plunge in aircraft orders at Boeing and a drop in motor vehicles orders saw orders for transportation equipment falling 5.6 per cent in January. It was the second straight month of declines in this volatile component.

Boeing reported on its website it received orders for only 38 aircraft last month, sharply down from 319 planes in December.

Non-defence capital goods orders excluding aircraft, a closely watched proxy for business spending plans, rose 1.7 per cent after dropping by a revised 1.8 per cent in December.

Economists had expected orders for these so-called core capital goods to slip 0.5 per cent last month after a previously reported 0.6 per cent fall in December.

Shipments of core capital goods, which are used to calculate equipment spending in the government’s measure of gross domestic product, fell 0.8 per cent last month.

December’s shipments were revised to show a 0.3 per cent increase instead of the previously reported 0.6 per cent rise.

Economists attributed the gain in December to businesses pushing through spending before the year-end expiration of tax incentives.

In a separate report, the Labour Department said initial claims for state unemployment benefits increased 14,000 to a seasonally adjusted 348,000. Claims for the prior week were revised to show 2,000 fewer applications received than previously reported. Economists polled by Reuters had forecast first-time applications for jobless benefits slipping to 335,000 in the week ended February 22, which included the Presidents Day holiday.

While last week’s increase pushed them to the upper end of their range so far this year, it probably does not signal labor market weakness as claims tend to be volatile around federal holidays.

The four-week moving average for new claims, considered a better measure of underlying labour market conditions as it irons out week-to-week volatility, was unchanged at 338,250.