Economic reports: Fewest unemployment claims since July 2008; home prices fall
Wednesday, November 24, 2010; 9:33 PM
A hint of improvement in the unemployment picture helped lift U.S. stocks Wednesday as the nation headed into the economically important holiday shopping season.
The number of people seeking jobless benefits fell to its lowest level since July 2008, the Labor Department reported. On a seasonally adjusted basis, initial claims for unemployment insurance totaled 407,000 in the week that ended Nov. 20, down from 441,000 the week before. In March 2009, the weekly figure was as high as 651,000.
Other economic indicators released Wednesday gave mixed signals about the economy, including grim news about the real estate market, but the stock market tracked the bright side.
Despite renewed tensions on the Korean Peninsula, the Dow Jones industrial average rose 1.4 percent, to 11,187.28; the Standard & Poor's 500-stock index gained 1.5 percent, to 1198.35; and the Nasdaq Stock Market composite index climbed 1.9 percent, to 2543.12.
"The momentum is upward; the recovery seems firmly intact," said Paul Edelstein, senior economist at the consulting firm Decision Economics. But the recovery is weak, "and the amount of growth that were seeing just isn't enough . . . to support sustainable jobs growth," Edelstein said.
Personal income, outlays and saving all increased in October, the Commerce Department reported Wednesday. Personal income ticked up 0.5 percent from September. Personal consumption expenditures increased by $44 billion, compared with an increase of $26.9 billion in September. As a percentage of disposable personal income, the savings rate was 5.7 percent in October, up from 5.6 percent a month earlier.
A survey of consumer sentiment showed improvement. The index compiled by Thomson Reuters and the University of Michigan hit 71.6 percent in November, up from 67.7 in October and 67.4 in November 2009. That was its best showing since June, but it was still lower than at any point in the first half of 2010.
The director of the survey wrapped up the results in a less-than-cheerful assessment.
"Unfortunately, there has been no improvement in consumers' financial prospect in the past two years," wrote Richard T. Curtin, the survey's chief economist. "While consumers clearly believe that the recovery has gained some traction, most still think that the economic gains will be too small to improve their own job and income position anytime soon."
New orders for manufactured durable goods fell 3.3 percent in October, the Census Bureau reported Wednesday. That followed a 5 percent increase in September. The decline included drops in orders for defense-related items, but even excluding warplanes, guided missiles and the like, orders were down 2.1 percent in October.
Meanwhile, new data on home sales released Wednesday showed continued weakness in the housing sector.
Home prices fell 1.6 percent from the second quarter of this year to the third quarter, according to an index compiled by the Federal Housing Finance Agency.
From the third quarter of last year, the decline was 3.2 percent. Because prices of other goods and services rose 2 percent over that period, the inflation-adjusted price of homes fell 5.1 percent, the agency reported.
Sales of new homes fell at a seasonally adjusted annual rate of 8.1 percent from September to October, the government reported, but it added that the measure was plus or minus 16.1 percent. That meant the rate could have been negative 24.2 percent or positive 8 percent.
The housing market "is still in deep trouble. There really isn't any revival there yet," said Nigel Gault, chief U.S. economist at IHS Global Insight.