Cleaning & Restoration Breaking News

Reports Brighten U.S. Growth Prospects

November 26, 2003
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WASHINGTON (Reuters) - Prospects for U.S. growth brightened on Wednesday as new unemployment benefit claims decreased to a nearly three-year low and durable goods orders posted a surprisingly strong jump, government reports showed.

A slew of economic indicators pointed to firmer business activity -- something that also should help reinforce a faster pace of growth by easing Americans' job fears and putting more cash in consumer wallets.

The Labor Department said first-time claims for state unemployment benefits dropped 11,000 to 351,000 in the week ended Nov. 22 -- the lowest since January 2001, before the economy slipped into recession.

Separately, the Commerce Department said new orders for costly and long-lasting manufactured goods climbed 3.3 percent to a seasonally adjusted $184.53 billion -- far ahead of Wall Street economists' forecasts for a 0.8 percent gain.

The jump in October orders was the largest since an 8.1 percent surge in July 2002, and fit with other signs that businesses were picking up the pace on investment amid evidence the broader economy is strengthening.

A key category called non-defense capital goods orders excluding aircraft, taken by economists as a proxy for business expansion plans, rose 1.7 percent last month on top of a 5.8 percent September increase.

"The rise in non-defense goods orders is telling us that firms are really beginning to open up their purse strings when it comes to capital spending," said economist Eric Green of BNP Paribas in New York.

The improving job market is helping buoy consumer spirits, a survey issued by the University of Michigan to paying customers indicated. Its index of consumer sentiment for November rose to 93.7 from an October reading of 89.6, market sources said.

That came after another report on Monday from the Conference Board, a private research group, that showed consumers' mood improved strongly in November as its index jumped to highs not seen since Sept. 2002.

The National Association of Purchasing Management-Chicago said on Wednesday that business activity in the Midwest surged this month as its business barometer rose to 64.1 from 55 in October -- its highest in nine years.

A third report on Wednesday from the Commerce Department showed consumers, who spent heavily on new cars and other goods earlier this year as Bush administration tax cuts took hold, were growing more restrained.

Personal spending was unchanged last month after dropping 0.3 percent in September, a weaker performance than anticipated by economists, who had forecast a 0.1 percent pickup.

The slack in spending was concentrated in the auto industry and may partly reflect the waning impact of the tax cuts.

But it was not a promising sign ahead of the vital Thanksgiving-to-Christmas shopping season when many merchants count on making as much as 70 percent of their annual sales.

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