- The Washington Times - Friday, January 4, 2008

From combined dispatches

Reports on factory orders and the labor market portrayed an economy that is skirting recession as attention shifts to today’s figures on employment.

Demand for U.S. manufactured goods rose 1.5 percent in November, more than forecast but propelled by a surge at petroleum refineries, the Commerce Department said yesterday. Companies added 40,000 jobs last month, down from the previous month’s 173,000 increase, ADP Employer Services said.

The figures did little to ease concern among investors that growth is slowing. Weaker job creation hurts spending by consumers already burdened by soaring energy costs and retreating home prices.

The American Bankers Association said yesterday that late payments on consumer loans, including those for vehicles, home improvement and certain home-equity loans, climbed during the summer to their highest point since the recession of 2001.

The bankers group said the delinquency rate on a composite of consumer loans increased to 2.44 percent in the July-to-September quarter. That was up sharply from 2.27 percent in the previous quarter and was the highest late-payment rate since the second quarter of 2001.

Payments are considered delinquent if they are 30 or more days past due.

Late payments on credit cards, meanwhile, dipped during the summer.

The reports “are worrisome without being catastrophic,” said Peter Kretzmer, an economist at Bank of America Corp.

“We are seeing continuing labor market weakness, but it still doesn’t appear to be completely rolling over.”

A Labor Department report yesterday showed initial jobless claims decreased to 336,000 last week from a two-year high of 357,000 the prior week. The total number of people collecting unemployment insurance rose for a fourth straight week, to the highest since October 2005.

“This is one piece of evidence that suggests maybe we can muddle through this period without going into recession,” said Nariman Behravesh, chief economist at Global Insight Inc. in Lexington, Mass. Claims “would have to go up to about 375,000 [to] 400,000 before the economy would be in real trouble.”

“The slowdown in hiring is intensifying,” said Kevin Logan, senior market economist at Dresdner Kleinwort in New York. “Growth has slowed and it makes the economy more vulnerable to a potential recession.”

The ADP report was forecast to show an increase of 33,000 according to the median estimate of 16 economists surveyed by Bloomberg News. Estimates ranged from a drop of 50,000 to a gain of 90,000.

ADP includes only private employment and does not consider hiring by government agencies. Macroeconomic Advisers LLC in St. Louis produces the report jointly with ADP.

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