- The Washington Times - Friday, December 7, 2001

ASSOCIATED PRESS

The number of Americans receiving unemployment benefits took the biggest plunge in 18 years in late November while orders to American factories in October posted the first increase since May, the government reported yesterday.

Analysts said the dramatic drop in people getting jobless benefits and the better-than-expected increase in orders to factories were further indications that the current recession may be showing signs of bottoming out.

But balanced against those government reports yesterday, the nation's retailers said the all-important holiday shopping season had gotten off to a disappointing start with sales below expectations.

The lackluster sales reports from major retailers had a dampening effect on Wall Street in early trading, with the Dow Jones industrial average struggling to hold on to strong gains posted over the past two sessions.

The Commerce Department reported that factory orders rose by 7.1 percent in October after a 6.5 percent drop in September and a 0.1 percent decline in August. Orders for both durable and nondurable goods had not shown an increase since May.

The strength in October came from a big increase in transportation, reflecting strong car sales triggered by free-financing deals.

Meanwhile, the Labor Department said the number of Americans receiving unemployment benefits plunged by 349,000 in late November, the biggest decline since Jan. 1, 1983, when the country was pulling out of the 1981-82 recession, the nation's worst downturn since the Great Depression.

In addition, the number of new applications for unemployment benefits dropped by 18,000 last week, the fifth decline in the past six weeks.

A third report showed that Americans' productivity output per hour of work rose at an annual rate of 1.5 percent in the July-September quarter, compared with an increase at a 2.1 percent rate in the April-May quarter.

The improvement in jobless claims and the rise in factory orders were the latest positive sign that the country's current recession, which began in March, may be bottoming out.

Other reports this week have shown stronger-than-expected consumer spending and a rebound in construction activity.

All the positive news has triggered a rally on Wall Street, with investors growing increasingly optimistic that the downturn is ending and the economy will resume growing early next year. The Dow Jones Industrial Average rose by 220 points Wednesday, closing above the psychologically important 10,000-level for the first time since Sept. 5.

Still, analysts cautioned there will be more bad news before there are clear signs that the economy has entered a sustained recovery. The government today will release the unemployment rate for November. Private forecasters are predicting the number will jump to 5.7 percent, up from the 5.4 percent in October, reflecting the large number of layoffs that have occurred since the terrorist attacks.

But the continuing drop in weekly jobless claims and the sizable drop in the total of Americans drawing benefits was viewed as a good sign that the economy may be stabilizing after the severe jolt caused by the terrorist attacks.

The great fear had been that continued widespread layoffs would cause Americans to stop spending and this would cause the current recession, the first in a decade, to deepen. Consumer spending accounts for two-thirds of total economic activity.

The decline of 18,000 in benefit applications pushed the weekly total to 475,000, still a number indicating the country is in a recession.

The big decline in the number of Americans receiving benefits left this total at 3.64 million for the week ending Nov. 24. These data are released one week after the new-claims figure.

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