US jobless claims fall, durable orders mixed

New US claims for jobless aid fell last week, hinting at an improvement in the labour market, but declines in new home sales and orders for a range of factory goods in January showed the economy still faced headwinds. Initial claims for state unemployment insurance benefits fell 22,000 to a seasonally adjusted 391,000, the Labour Department said on Thursday. Economists had expected claims to drop to 400,000 last week.
"Jobless was unambiguously good news for the economy. It is consistent with our belief that we are going to see a very strong gain in non-farm payrolls," said David Resler, chief economist at Nomura Securities International in New York. A separate report from the Commerce Department showed new single-family home sales tumbled 12.6 percent in January to a seasonally adjusted 284,000 unit annual rate. Economists had forecast new home sales sliding to a 310,000-unit pace.
Sales surged in December as buyers in California rushed to take advantage of a tax credit for new homes before it expired at the end of the year. Sales in the West plunged 36.5 percent after spiking 62.5 percent the prior month. A second report from the department showed orders for long-lasting manufactured goods, excluding transportation, dropped 3.6 percent last month, the biggest fall since January 2009, after rising 3.0 percent in December.
Economists had expected orders excluding transportation to rise 0.4 percent in January. The data had little impact on US financial markets, where traders continued to monitor the worsening political unrest in Libya, which has sent crude prices soaring. US Treasury debt prices rose on safe-haven buying, while stocks were flat.
Manufacturing has been the main driver of the economy's recovery and January's durable goods orders report hinted at a slowdown. Economists cautioned, however, against reading too much into the data as it tends to be very volatile. Some of the sting from the report was blunted by big upward revisions to December's data.
Overall durable goods orders rose 2.7 percent, the biggest increase since September, after falling 0.4 percent the prior month. The rise in overall orders reflected a 4,900 percent surge in aircraft bookings, which likely reflected the bulk of December orders from aircraft maker Boeing, which analysts said had not been fully captured in the durable goods report for that month.
Outside transportation, there were big declines in orders for machinery, computers and communications equipment. The Commerce Department report showed non-defence capital goods orders excluding aircraft, a closely watched proxy for business spending, dropped 6.9 percent last month, the biggest decline in two years, after a revised 4.3 percent increase in December. Markets had expected a 2.5 percent decline.
"It's a weak start to the quarter, but the bottom line is capex is going to remain a pretty decent contributor to growth even with this weakness here in January," said Tom Porcelli, US economist at RBC Capital Markets in New York. Core capital goods shipments, which go into the calculation of gross domestic product, fell 2.0 percent after rising 2.5 percent in December. Unfilled orders for manufactured durable goods rebounded in January, while inventories rose for the 13th straight month.