Factory Orders, Jobless Claims Higher

O rders to U.S. factories rose 0.5% in February, the Commerce Department reported. It was the second straight small gain and, analysts said, a fresh sign that the manufacturing sector is slowly reviving. But another government report said first-time claims for jobless benefits rose for a second week in a row in mid-March as businesses continued to hand out pink slips despite the emerging recovery.

Key factors: Orders for both durable and non-durable goods rose to a seasonally adjusted $236.4 billion. Factory orders for durable goods--items such as trucks and turbines expected to last more than three years--slipped 0.3% in February to $120.2 billion. Orders for military equipment, which often are volatile, fell 18.7% after dropping 20% in January and soaring 89.4% in December. On the other hand, orders for non-durable goods such as chemicals and clothing rose 1.4%, the first advance in three months. The Labor Department said initial claims for unemployment insurance unexpectedly posted a second straight increase for the week ended March 21. The report said 456,000 claims were filed, up 9,000 from the previous week to the highest level since 460,000 applications were made in the week ending Feb. 29.

Good signs: The factory orders show that the manufacturing sector is improving, albeit at a modest pace. Growth in the non-durable goods sectors usually precedes the more expensive durable-goods category as a recovery begins.

Bad signs: Orders for non-military capital goods excluding aircraft, a barometer of industry plans to expand and modernize, fell 2.9% after rising 4.5% the previous month. On the labor front, the higher claims for unemployment benefits indicate that layoffs are still going on. This indicates that the unemployment rate in March probably failed to improve on February’s 7.3% rate. The Labor Department will release the March rate today.

Factory Orders

Total new orders in billions of dollars, seasonally adjusted

Feb., ‘92: 236.4

Jan., ‘92: 235.2

Feb., ‘91: 233.1

Source: Commerce Department