U.S. Big-Ticket Orders Slide, Jobless Claims Rise

By Agence France-Presse U.S. factories suffered a slump in orders for big-ticket "durable items" in May and jobless queues grew last week, data showed June 24. But analysts said it was too early to panic about the economic outlook ahead of a near-certain rise in key short-term interest rates next week. On the bright side, new home sales boomed as people scrambled to buy before mortgage rates go up. Orders for durable goods such as cars and washing machines fell a seasonally adjusted 1.6% in May, the Commerce Department said, compounding the previous month's 2.6% drop. Economists had predicted a rise in orders. "The decline raises some questions as to whether the impressive momentum of the manufacturing sector is cooling a bit," said Anthony Karydakis, economist at Banc One Capital Markets. But other analysts were less worried. "Durable-goods orders in the last year are up over 8%, and when the extremely volatile defense sector is removed, they are up over 10%," said Manufacturers Alliance President Thomas Duesterberg. "The decline in the April and May numbers certainly bears watching, and may indicate a slowing of the rate of growth," Duesterberg said. "But other evidence continues to corroborate the healthy long-term growth trend in capital goods." Orders for transportation equipment tumbled 4.1%, with motor vehicle and parts orders down 4%, civilian aircraft orders down 5.3%, but war plane orders up 14%. Computer and electronic product orders slid 1.8%. Fabricated metal product orders dropped 2.4%. Capital goods orders declined 2.7%. Wachovia senior economist Mark Vitner said economists' forecasts were wide of the mark, but the figures were very volatile. The longer-term trend showed durable-goods orders up at an annual rate of 27% over the past three months, and up 17.7% when compared with last year, Vitner said. Concerns for the job market rose. The number of new unemployment benefit claimants jumped 13,000 to a seasonally adjusted 349,000 in the week ended June 19, the Labor Department said. Private economists had forecast an increase of only 4,000. But housing remained red hot. Sales of new U.S. homes soared 14.8% -- the biggest rise in 11 years -- to a record seasonally adjusted annual rate of 1.37 million in May as people scrambled to buy before interest rates rise. New home sales were up 25.3% from a year earlier, the Commerce Department said. Federal Reserve policymakers are expected to boost the key short-term interest rate for the first time in four years, raising it to 1.25% from 1%. Copyright Agence France-Presse, 2004

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