Monday, October 6, 2008

Factory Orders Down and Unemployment Claims Up - A Bad Combo

Unemployment claims are up, the unemployment rate is flat at 6.1%, factory orders are down. None of of this is good news for the economy going forward. The hidden bomb in this data is that it was collected before the credit market collapse in late September/early October. These numbers will be interesting to see in a few months time. From the WSJ:

New data show the economy's troubles deepening, with jobless claims reaching their highest level since the 2001 recession (see chart below) and factory orders tumbling sharply as the manufacturing sector struggles.

The number of U.S. workers filing new claims for unemployment benefits rose 1,000 to a seasonally adjusted 497,000 in the week ended Sept. 27, the Labor Department said. That was the highest since Sept. 29, 2001, and reflected the effect of hurricanes Gustav and Ike as well as a weakening economy.

Even after accounting for the hurricanes, the report signaled labor-market weakness at a time when the crisis on Wall Street threatens to pull consumer spending and the overall economy into a deeper downturn.

The four-week average of new claims, which attempts to smooth out volatility, rose 11,500 to 474,000. That is the highest since October 2001 -- when the economy was in a recession -- and well above levels typically consistent with declines in monthly employment.

The tally of continuing claims, those by workers collecting benefits for more than one week in the week ended Sept. 20, jumped by 48,000 to 3,591,000. That is the highest since September 2003, suggesting it is getting harder for the unemployed to find new work.

The 4% decrease in orders for manufactured goods in August followed a downwardly revised 0.7% increase in July, the Commerce Department said Thursday. Initially, the government said orders rose 1.3% in July.

"The factory sector appears to be entering another down leg, deepening the industry's recession," said Steven Wood, chief economist at Insight Economics.

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