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Factory orders rise less than expected

But economists say the sector remains in good shape. New jobless- benefit claims inch up.

August 03, 2007|From Reuters

WASHINGTON — New orders at U.S. factories rose less than expected in June and new jobless-benefit claims edged higher last week, government data released Thursday showed.

Factory orders increased 0.6% in June and fell somewhat once the volatile transportation component was excluded. Analysts polled by Reuters expected orders to climb 1% in June from an unrevised 0.5% fall in May.

Economists said the data indicated that the sector remained in good shape -- important because manufacturing has helped offset weakness in the U.S. housing market.

June nondefense capital goods orders excluding aircraft, viewed as a good proxy for business spending, were unchanged, which was slightly better than a 0.7% decline seen in an earlier estimate by the government last week.

"The best thing about the report is that the core reading, nondefense capital orders, was revised higher. This suggests a slightly upward revision, about a tenth of a percentage point, to second-quarter GDP," said Michelle Meyer, an economist at Lehman Bros. in New York.

The U.S. economy grew at a 3.4% annualized pace from April to June, according to an initial government estimate, up from a 0.6% rate in the first quarter.

Excluding transportation, factory orders declined 0.5%, the first fall since January, when they shrank 2.5%. The category's June performance was hurt by a 3.6% drop in orders for computers and electronic products and a 6.1% fall in primary metals.

The other main economic release Thursday was from the U.S. Labor Department, whose data showed that new applications for jobless benefits rose a slim 4,000 last week to a still-low 307,000. That signaled a healthy job market ahead of the monthly employment report due today. Continuing claims by people who already qualify for benefits and remain on the jobless rolls fell by 16,000 to 2.53 million for the week ended July 21, the most recent period these figures were available.

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