Posted on 06/05/2003 5:48:24 PM PDT by NormsRevenge
WASHINGTON (Reuters) - The number of Americans lining up to claim unemployment benefits surged unexpectedly last week and factory orders tumbled in April, reports on Thursday showed, indicating the economic recovery is shaky.
But consumers provided a bright spot, with May retail sales doing better than forecast as shoppers snapped up clothing and hunted for bargains.
"The pick up in the economy is still a forecast," said Paul Kasriel, chief economist at Northern Trust. "The economy here and now is still very weak."
Blue-chip stocks fell slightly after the reports but finished the day higher. The Dow-Jones industrial average ended up 2.32 points at 9,041.
U.S. Treasury yields set record lows after the data, with the European Central Bank's interest rate cut also fueling prospects the Federal Reserve (news - web sites) would ease when its policy-makers next meet on June 24-25. But bonds later reversed course as traders sold on fears that a surprise improvement in Friday's payroll's number could derail the recent rally.
The Labor Department (news - web sites) said the number of people applying for U.S. initial jobless aid rose by 16,000 to 442,000 in the May 31 week, its highest level in more than a month.
Analysts were expecting claims to drop to 420,000 from a revised 426,000 for the previous week.
"The labor market continues to struggle," said David Rosenberg, chief North American economist at Merrill Lynch in a report. "Companies remain hesitant to hire."
Friday's employment report for May will provide a more comprehensive picture of the jobs market. Analysts are expecting a drop of 39,000 for non-farm payrolls, after a fall of 48,000 the previous month.
"If we can get our (gross domestic product) growing even faster then we're going to see some job growth and some pick-up and I can see that happening in the months ahead," John Taylor, Treasury Undersecretary for International Affairs said in a CNN-FN interview on Thursday.
There was also disappointing news in the manufacturing sector. The Commerce Department (news - web sites) said April factory orders sank 2.9 percent, worse than forecasts for a drop of 1.5 percent.
The report showed sharp falls in demand for machinery, transportation and electrical equipment.
Orders for computers and electronic products rose a modest 0.3 percent, but that followed a much faster 2.4 percent increase the previous month.
Analysts said more recent data painted a better picture.
"These are April data and the more current data from the ISM report would suggest that perhaps manufacturing is stabilizing at a low level," said Kasriel.
Monday's report from the Institute for Supply Management showed a rebound in the sector in May. Its index of manufacturing rose to 49.4 from 45.4 in April, beating economists' forecasts for a rise to 48.6.
And a leading manufacturing group, the National Association of Manufacturers (news - web sites), said last month it was seeing signs of recovery, helped by a weaker dollar, low inventories, better credit conditions, lower energy prices, spending and tax cuts.
One highlight of Thursday's data was on May retail sales.
Bank of Tokyo-Mitsubishi said its index of 72 retailers showed a 2 percent rise in May sales at stores open at least a year, above its forecast for a 1.5 percent increase.
Discounters like Wal-Mart Stores Inc. (NYSE:WMT - news) and warehouse clubs such as Costco Wholesale Corp. (Nasdaq:COST - news) and BJ's Wholesale Club (NYSE:BJ - news) fared well last month as cash-strapped consumers looked for bargains on clothes and staples like food and household cleansers.
Analysts had been expecting a lackluster performance as many retailers have reported overflowing inventory and have had to discount merchandise, but price-cutting can fuel sales.
I hope you made provisions for such a possibility in the PO...
I'm sure we did, but it's still lost work. We may be compensated for the parts and somewhat for our trouble, but the labor part will go begging -- more lay-offs.
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