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Data suggest U.S. economy growing only modestly
WASHINGTON — A spate of data Thursday painted a mixed picture of the U.S. economy: Demand for long-lasting manufactured goods fell and slightly fewer people signed contracts to buy homes. At the same time, the job market looked a little better.
Taken together, the reports suggest the economy is growing only modestly and not quickly enough to spur much hiring.
“The economy overall has only weak forward momentum,” Nigel Gault, chief U.S. economist at IHS Global Insight, said in a note to clients. “The news from housing may be improving, but manufacturing is struggling now.”
Most of the data seemed discouraging on the surface. But a closer inspection of the details offered some promise.
• Companies cut orders for long-lasting goods by 13.2 percent in August, the Commerce Department said. That was the biggest drop in more than three years but it was largely influenced by a 102 percent decline in volatile aircraft orders. Excluding transportation equipment, orders fell only 1.6 percent. And in a positive sign, orders in a category that reflect business investment plans rose 1.1 percent, the first increase since May.
• The overall economy grew at a 1.3 percent annual rate in the April-June quarter, much lower than the 1.7 percent the government previously estimated. About half of the downward revision stemmed from the severe drought in the Midwest, which cut overall farm output. But growth also fell because exports and consumer spending expanded at a slower pace.
• The number of Americans who signed contracts to buy previously occupied homes fell in August from a two-year high in July. The National Association of Realtors said its index of sales agreements declined 2.6 percent to 99.2. That’s just below the reading of 100 that is considered healthy. Still, the index is 10.7 percent higher than a year ago.
Economists expect growth to hover near or below 2 percent for the rest of the year. That’s typically too weak to create enough jobs to lower the unemployment rate.
One report appeared to offer some hope that the job market will improve.
Weekly applications for unemployment benefits plunged 26,000 to a seasonally adjusted 359,000, the lowest level in two months, the Labor Department said. The four-week average, a less volatile measure, fell to 374,000.
Applications are a measure of the pace of layoffs. When they consistently fall below 375,000, it typically indicates that hiring is strong enough to lower the unemployment rate.
The weekly figures can be volatile, causing most economists to focus on the four-week average.
Economists were mildly encouraged by the unemployment applications. Still, many still expect the government’s employment report for September to show only modest job gains, perhaps about 100,000. That’s about the same as in August. The September jobs report will be released next week.
The September jobs report will be released next Friday.
The past few reports on applications for unemployment benefits “suggest no significant acceleration or deceleration in employment growth,” said Jim O’Sullivan, an economist at High Frequency Economics.
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