Orders for durable goods plunge by 8.5 percent, new jobless claims increase
Thursday, October 25th 2001, 12:00 am
By: News On 6
WASHINGTON (AP) _ Orders to U.S. factories for big-ticket durable goods plunged in September for the fourth consecutive month. In another indication of deepening economic woes, the number of Americans filing new claims for unemployment benefits rose last week to the second-highest level in nearly a decade.
The Commerce Department said the 8.5 percent decline in orders for durable goods, items expected to last three or more years, was led by a 15.9 percent falloff in demand for transportation goods, a category that includes autos and airplanes.
The drop in orders was certain to worsen the problems in the manufacturing sector, which has shed more than 1 million jobs since the spring of 2000.
The Labor Department reported that newly laid-off Americans filing for unemployment benefits rose by 8,000 last week to 504,000, the second-highest figure in nearly a decade and a level that is generally associated with recessions.
The department also reported that workers' wages and benefits climbed by 1 percent for the three months ending in September, little changed from a 0.9 percent rise for the three months ending in June.
During the last 12 months, Americans' wages and benefits rose by 4.1 percent, down from a 4.3 percent rise in the 12-month period ending in September 2000. Analysts said this showed that the sluggish economy is producing less generous compensation packages.
The Federal Reserve reported this week that the terrorist attacks had brought economic activity to a virtual standstill in the days immediately following the Sept. 11 tragedy and that no part of the country had been spared higher layoffs and weaker business activity.
Most economists say the country, which had been struggling with weak economic growth for more than a year, was pushed into a recession by the terrorist attacks.
They are predicting that the Federal Reserve, with inflation pressures continuing to abate, will continue to cut interest rates in an effort to pull the country out of the slump. The next rate cut, which would be the Fed's 10th this year, is expected to occur on Nov. 6.
The drop in durable goods orders pushed the level of new orders down to $165.44 billion, the lowest level in more than five years. The decline followed a 0.5 percent August decrease and was far larger than the 1.3 percent dip that many analysts had been forecasting.
The report on jobless claims showed that the increase last week pushed the weekly number to its second-highest point since July 1992, when the country was still struggling to emerge from the 1990-91 recession. Claims had soared to 535,000 for the week ending Sept. 29. The recent big increases pushed the four-week moving average for claims to 505,000, the highest point since the depths of the last recession in March 1991.
The number of companies announcing layoffs has accelerated since the September attacks as airlines and the tourism industry in general have been especially hard-hit. With all the layoffs, the number of Americans drawing unemployment benefits now stands at an 18-year high of 3.53 million.
As part of an economic stimulus package now moving through Congress, Democrats hope to include a provision that would extend by an additional 13 weeks the 26-week period that workers can draw jobless benefits.
The government said the 4.1 percent rise in the Employment Cost Index over the past 12 months included a 3.6 percent increase in wages and salaries and a 5.1 percent rise in benefits such as health insurance and pensions. All those categories had risen at a faster pace during the 12 months ending in September 2000.
Before the Fed began cutting interest rates in January, it had been boosting credit costs in an effort to cool off an economy that was growing at supercharged rates through the spring of 2000, pushing the nation's unemployment rate down to a four-decade low of 3.9 percent.
Since that time, however, the extended period of economic weakness has produced a jobless rate of 4.9 percent. Many analysts forecast a recession will push the number close to 6 percent.