Slowdown: Jobless Rate Jumps, Durable Goods Slip
Orders for costly U.S. manufactured goods plunged in August and the number of workers filing new claims for jobless benefits shot up, according to government reports Thursday that showed the economy rapidly weakening.
The Commerce Department said new orders for durable goods like new cars and refrigerators slumped by a sharper-than-expected 4.5 percent as demand for nearly every major category of manufactured item weakened from July.
The Labor Department said new claims for jobless benefits jumped 32,000 last week to a seasonally adjusted 493,000, though it was primarily because of the impact of hurricanes Ike and Gustav.
The bleak data reinforced comments on Wednesday by Federal Reserve Chairman Ben Bernanke, who told Congress economic activity was broadly weakening. The Fed chief warned the situation could get worse quickly if lawmakers do not quickly approve a bailout package to help buy bad assets from financial firms to try to free up credit markets.
Analysts said the data only reinforced a widespread impression that economic activity is fading in the second half of the year, perhaps more severely than anticipated.
"The durable goods and jobless claims data that just came out this morning are certainly on the weak side, which is not totally unexpected given the fact the economy is likely to weaken somewhat during the second half," said Michael Sheldon, chief market strategist for RDM Financial in Westport, Conn.
Excluding transportation, August durables orders were down 3 percent after edging up 0.1 percent in July. The fall in orders excluding transportation was the steepest since the beginning of 2007.
Last week's jobless claims total was the highest since Sept. 29, 2001, in the aftermath of terror attacks on New York and Washington.
Companies have cut their payrolls every month so far this year and joblessness is expected to worsen, with many economists saying the United States may already be in recession.
(Watch the accompanying video to see CNBC's experts break down the economic numbers...)
The U.S. dollar extended losses after the worse-than-expected decline in durable goods orders and the sharp increase in new jobless claims. Stock futures pared gains after the reports.
Transportation orders tumbled 8.9 percent in August after rising 2.8 percent in July. Non-defense capital goods excluding aircraft, seen as a barometer of business spending plans, were down 2 percent after increasing by 0.4 percent in July.