Business Investment Falls, as Do New Jobless Claims
Initial claims for state jobless benefits fell 10,000 to a seasonally adjusted 316,000, the Labor Department said on Wednesday. The decline, for a second consecutive week, defied economists’ expectations for an increase in jobless claims to 330,000 and raised hopes for strong employment growth in November.
“We are at a level that, if sustained, would point to solid job gains ahead,” said Joel L. Naroff, president and chief economist at Naroff Economic Advisors. “There is also a good chance that the October payroll gain may not have been an aberration.”
Employers added 204,000 jobs last month, far more than expected, fanning speculation that the Federal Reserve might start to wind down its economic stimulus sooner rather than later.
The improving labor market tone has helped to increase consumer sentiment. The University of Michigan’s final reading on its overall index on consumer sentiment increased to 75.1 for November, up from a final reading of 73.2 in October. A preliminary November reading of the index was 72.
But while the labor market picture is firming, businesses appear cautious about investment spending. The Commerce Department reported that nonmilitary orders for capital goods, excluding aircraft, declined 1.2 percent last month. Capital goods orders are a closely watched proxy for business spending plans.
It was the second consecutive monthly decrease in these so-called core capital goods. The data surprised Wall Street economists who had expected a gain, partly because private surveys of national factory activity showed strength in October.
“The picture of manufacturing strength from survey data is not being captured in the government-collected data on new orders, and this divergence is a puzzle,” said John Ryding, chief economist at RDQ Economics.
The report showed overall orders for durable goods — items including appliances and aircraft that are meant to last at least three years — fell 2 percent in October, largely because demand for civilian and military aircraft tumbled. Durable goods