New Reports Send Mixed Signals Factory Orders Drop Again, But So Do Unemployment Claims

Factory orders for expensive, long-lasting goods fell in June for the fourth time in five months, providing fresh evidence the economy is still sluggish.

But the government also said Thursday there was a large decline in claims for jobless benefits last week, blurring the picture a bit.

The Commerce Department said durable-goods orders slipped 0.1 percent last month after surging 2.6 percent in May.

Analysts, who had predicted a modest rise for June, said the Federal Reserve might feel more inclined to cut short-term interest rates again.

“The durable-goods report is telling you the factory sector is not out of the woods yet,” said Maury Harris, chief economist at PaineWebber Inc. in New York City. “The Federal Reserve knew what they were doing when they cut those rates and they may have to cut them more.”

The Labor Department said the number of American workers filing new claims for jobless benefits fell by 42,000 last week to a seasonally adjusted 374,000, down from 416,000 a week earlier. While the decline was encouraging, analysts noted that claims remain at a high level, pointing to softness in the job market.

In other economic news, an ABC-Money magazine survey said consumer confidence sank to a ninemonth low and a trade group said mortgage applications fell 4.4 percent last week.

“The economy has a bit of an irregular heartbeat. But there does seem to be life and forward movement,” said Robert Brusca of Nikko Securities International.