- WASHINGTON (Reuters) - The
number of Americans signing up for jobless benefits rose last week while
orders for costly U.S. durable goods and existing home sales plunged in
September, according to a series of reports released on Thursday that painted
a grim picture of the U.S. economy.
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- Adding to the tide of negative data that weighed on stock
markets and boosted bonds, a private research group said its index of help
wanted advertising also dropped.
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- Analysts said the reports hardened the conviction that
the already weak U.S. economy had slid into a recession following the attacks
on Sept. 11 and strengthened expectations that the Federal Reserve will
cut interest rates for the 10th time this year when it meets on Nov. 6.
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- ``Clearly all of the numbers put together confirm the
overall economic environment is becoming quite dismal,'' Anthony Karydakis,
senior financial economist at Banc One Capital Markets in Chicago, told
Reuters Television.
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- The Bush administration is pressing to get a stimulus
package through Congress to help the shaky economy. The House of Representatives
on Wednesday narrowly approved a Republican-backed plan that would inject
$100 billion into the economy over the next year.
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- Stocks, initially pushed lower by the weak data, staged
a dramatic turnaround by the end of the session on hopes that the stimulus
package and the Fed's nine rate cuts this year would lead to a recovery
by next year.
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- The Dow Jones Industrial Average finished more than 117
points or 1.25 percent higher at 9462.9 while the tech-laden Nasdaq rose
2.54 percent to 1775.47.
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- LABOR MARKET WEAKER
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- The Labor Department said the number of first-time jobless
claims rose 8,000 to a seasonally adjusted 504,000 for the week ended Oct.
20. The four-week moving average of initial claims, considered a more reliable
gauge than the weekly data, climbed 12,000 to 505,000, a level unseen since
March 1991, at the end of the last U.S. recession.
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- And in a sign workers who are losing their jobs are having
trouble finding new ones, continued claims for state jobless benefits for
the week ended Oct. 13 -- the most recent week for which data were available
-- rose 56,000 to 3.65 million, the highest level in more than 18 years.
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- ``There's no doubt that the claims data point to a significantly
higher unemployment rate at some point in the next few months,'' Stephen
Stanley, senior financial economist at Greenwich Capital Markets in Greenwich,
Conn., said.
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- Last month, the unemployment rate was 4.9 percent, the
highest level in four years.
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- In another report pointing to economic weakness, the
Commerce Department said orders for costly U.S. durable goods fell for
the fourth straight month in September.
-
- Led by big declines in orders for aircraft, computers
and communications equipment, the value of new orders for long-lasting
goods last month plunged 8.5 percent to $165.44 billion, the lowest level
since Aug. 1996. The drop in September followed a 0.5 percent decline in
August.
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- The decline in September was the biggest drop since January,
and marked the first time durable orders fell for four straight months
since the series began in 1992, Commerce Department officials said. Durable
goods are items that are meant to last for three years or more.
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- ``The orders numbers suggest that capital spending is
continuing to go down a black hole,'' said Ian Morris, chief U.S. economist
at HSBC Securities in New York.
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- FED SEEN CUTTING AGAIN
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- Fed Chairman Alan Greenspan is keeping a close eye on
durable goods orders and employment data as gauges of the economy's health
following the attacks in New York and Washington that left more than 5,000
dead, according to lawmakers who met with the central bank chief last month.
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- The data were released less than two weeks before the
Fed is scheduled to meet to discuss interest rates on Nov. 6. The Fed has
cut rates nine times this year -- twice since Sept. 11 -- to their lowest
level in nearly four decades.
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- With inflation apparently in check for now, the Fed is
seen as having plenty of room to cut rates again to prop up the economy,
which was at a near halt even before the attacks.
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- Analysts largely shrugged off a report released by the
government on Thursday that showed that the compensation of U.S. workers
climbed in the third quarter.
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- Labor said its Employment Cost Index, a broad gauge of
what employers pay in wages, salaries and benefits, rose 1.0 percent for
the three months ended September. That was up from a 0.9 percent rise in
the second quarter.
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- ``Right now, the Federal Reserve is not going to pay
too much attention to inflationary and wage pressures,'' said Asha Bangalore,
an economist with Northern Trust Co. in Chicago. ''The concern is how to
revive the economy.''
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- In another report, the National Association of Realtors
said sales of U.S. existing homes tumbled 11.7 percent in September to
a seasonally adjusted annual pace of 4.89 million units last month, down
from 5.54 million units in August. The drop was the largest since April
1995.
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- Officials at the NAR said the decline was largely due
to a standstill in sales and closings in the days immediately after the
Sept. 11 attacks. For much of the year, housing has been a shining star
in an otherwise gloomy U.S. economy.
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- The Conference Board said its index measuring the number
of jobs offered across the United States fell in September to its lowest
level since February 1982.
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- The private research group's Help Wanted Advertising
Index fell to 52 in September from 53 in August, as the sharp U.S. economic
slowdown led to mounting layoffs and a weakening job market. The index
stood at 79 in September 2000.
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