U.S. business investment still soft; jobless claims fall
By Lindsay Dunsmuir
WASHINGTON, Oct 24 (Reuters) - New orders for key U.S.-made capital goods fell more than expected in September and shipments also declined, a sign that business investment remains weak amid the continuing fallout from the U.S.-China trade war but other data on Thursday showed it has yet to have much effect on the overall jobs market.
The Commerce Department said orders for non-defense capital goods excluding aircraft, which are seen as a measure of business spending plans on equipment, fell 0.5% last month on less demand for transportation equipment, motor vehicles and parts, and computers and electronic products.
Data for August was also revised down to show core capital goods orders falling 0.6% instead of declining 0.4% as previously reported. Economists polled by Reuters had forecast core capital goods orders dipping 0.2% in September.
Such goods orders increased 1.0% on a yearly basis. Shipments of core capital goods dropped 0.7% last month. Core capital goods shipments are used to calculate equipment spending in the government's gross domestic product measurement. Shipments for August were flat after being revised from a previously reported 0.3% gain.
U.S. Treasury price rose following the report while U.S. stocks were little changed.
The U.S. Federal Reserve has cut interest rates twice this year and investors currently see another reduction in borrowing costs when policymakers meet next week as the economy grapples with the fallout from a more than year-long U.S.-China trade war and slowing global growth.
The manufacturing sector, which makes up about 11% of the U.S. economy, has been hobbled by the trade dispute, which has hurt business confidence and investment, and cast a cloud of uncertainty over the economic outlook.
U.S. manufacturing output fell more than expected in September, hampered by a strike at General Motors, Fed data showed last week while business investment fell at a 1.0% annualized rate last quarter, the biggest drop since the fourth quarter of 2015, the government reported last month.
Earlier this month, U.S. President Donald Trump outlined the first phase of a deal to end the trade war with China and suspended a threatened tariff hike, but officials on both sides said much more work needed to be done before an accord could be agreed.
Overall orders for durable goods, items ranging from toasters to aircraft that are meant to last three years or more, declined 1.1% in September after edging up a revised 0.3% in the prior month.
LABOR MARKET STRONG
Another report on Thursday showed the number of Americans filing applications for unemployment benefits unexpectedly fell last week, pointing to a still-tight jobs market even as hiring and economic growth has slowed.
Initial claims for state unemployment benefits declined 6,000 to a seasonally adjusted 212,000 for the week ended Oct. 19, the Labor Department said. Data for the prior week was upwardly revised to 218,000.
Economists polled by Reuters had forecast claims edging higher to 215,000 in the latest week. The Labor Department said no states had claims estimated last week.
The overall decrease was despite the ongoing General Motors strike. While striking workers are not eligible for unemployment benefits, the work stoppage has affected production, impacting non-striking employees at suppliers.
The United Auto Workers union reached a tentative agreement with the Detroit automaker last week on a new four-year-contract but will remain on strike until members complete a vote on the proposal by Friday.
The four-week moving average of initial claims, considered a better gauge of labor market trends as it irons out week-to-week volatility, declined 750 to 215,000 last week.
The claims report also showed the number of people receiving benefits after an initial week of aid fell 1,000 to 1.682 million for the week ended Oct. 12. The four-week moving average of the so-called continuing claims increased 6,500 to 1.677 million.
U.S. durable goods DataStream Charthttp://tmsnrt.rs/2ew7ABi
(Reporting by Lindsay Dunsmuir; Editing by Andrea Ricci)
((Lindsay.Dunsmuir@thomsonreuters.com; +1 202 898 8411;))
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