U.S. Economic Struggles Continue, Though Services Accelerate

By John S. McClenahen The U.S. economy continues to struggle to get growth going again. Not counting semiconductors, August new orders for manufactured goods fell slightly -- statistically less than one-tenth of a percentage point -- to $326.633 billion, reports the U.S. Commerce Department. Revised numbers show manufacturing new orders were $326.636 billion in July. The latest changes in initial claims for unemployment insurance are far more dramatic and discouraging, however. Initial jobless claims rose to 417,000 for the week ending Sept. 28, an increase of 5,000 from the previous week's revised mark of 412,000, says the U.S. Labor Department's Employment & Training Administration. The four-week moving average for initial claims also rose, to 423,000 from 420,500 in the previous week. In addition, continuing claims for unemployment insurance for the week ending Sept. 21 rose by 29,000 to 3.68 million, its highest level since June, notes Merrill Lynch & Co. economist Karen Dexter. The closing of U.S. West Coast ports, which began on Sept. 28, does not figure into any of these reports. Its effects, however, could start showing up in claims data slated for release on Oct. 10. Meanwhile, in an unexpected and pleasant surprise, the service sector of the U.S. economy grew faster in September than most economists had expected. The business activity index for non-manufacturing compiled by the Institute for Supply Management, Tempe. Ariz., was 53.9%, three full percentage points higher than August's 50.9% and 2.4 percentage points better than the consensus forecast of 51.5%. "The reported growth [in September] represents the eighth consecutive month of expansion in non-manufacturing business activity and the first month of increased expansion after three months of slower rates of expansion," notes Ralph G. Kauffman, the chairperson of ISM's non-manufacturing business survey committee and coordinator of the purchasing and supply management program at the University of Houston-Downtown.

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