Charley Pushes Up Jobless Claims

More Americans filed first-time claims for unemployment benefits last week than anytime since mid-April, an unexpected jump that partly reflected lingering effects of Hurricane Charley.

Claims rose by 19,000 to 362,000, the Labor Department said in Washington, topping the median forecast of 340,000 in a Bloomberg News survey.

July factory orders rose the most in four months, and productivity gains slowed last quarter, other government reports showed Thursday.

“The current quarter hiring has been slow, owing to the sluggish economic period of the second quarter,” said Mat Johnson, director of economics at ThinkEquity Partners in San Francisco. “With economic conditions firming since the second quarter, firms should exhibit a small degree of catch-up hiring late in the current quarter, then more accelerated hiring toward year-end.”

The 1.3% rise to $369.6 billion in factory orders followed a revised 1.2% increase in June that was more than the Commerce Department reported last month. Bookings for products other than transportation equipment rose 0.5% in July after rising 0.6% the month before.

U.S. worker productivity grew at a 2.5% annual rate in the second quarter, the Labor Department said, down from the previously estimated 2.9% pace and the slowest clip since the fourth quarter of 2002.

Floridians put out of work by Hurricane Charley accounted for about half of last week’s increase in initial claims for jobless benefits, a Labor Department spokesman said. Though the hurricane boosted initial claims in the last two weeks, it probably had little effect on the August jobs data since the storm hit Aug. 13, after the U.S. payroll survey was taken, economists said.

The number of people continuing to collect state jobless benefits fell to 2.882 million in the week that ended Aug. 21 from 2.887 million the previous week. The less volatile four-week moving average of continuing claims fell to 2.887 million from 2.892 million.

Factory orders increased as rising profits give companies the cash to replace aging equipment. Business spending on equipment and software accelerated in the second quarter. Unfilled orders accelerated in July, Thursday’s report showed, suggesting production will pick up and boost the economy.

Productivity, which measures the amount of work done by an employee in an hour, was revised lower after the government reported last month that second-quarter GDP growth was slower than initially estimated.

The pace slowed from a 3.7% annual rate in the previous three months, the Labor Department said. Labor costs rose in the second quarter at a 1.8% annual rate, the most since a 2.3% rise in the second quarter of 2002.

Costs fell 0.3% in the 12 months that ended in June. Adjusted for inflation, compensation per hour was 1.3% higher in the second quarter than the same period last year, the smallest 12-month gain in a year.

“The big gains in productivity were through savage cost cutting, and much of that is behind us,” said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York.

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Mixed signals

New factory orders, seasonally adjusted (in billions)

July: $369.6

Nonfarm business productivity, percentage change by quarter (Seasonally adjusted annual rate)

2004: +2.5%

Sources: Commerce Department, Bureau of Labor Statistics