September 27, 2012
By Becket Adams
This morning is a smörgåsbord of lousy econ news. Take your pick:
Durable Goods: Demand for long-lasting manufactured goods plunged in August because of a huge drop in volatile commercial aircraft orders.
The Commerce Department said Thursday that total durable goods orders fell 13.2 percent in August, the biggest drop since January 2009 when the country was in recession. Aircraft orders fell by 101 percent.
Business orders for machinery, electronics and other equipment, which are a good indication of their investment plans, rose 1.1 percent. That’s the first increase since May.
Overall, total orders fell to $198.5 billion in August. That’s still 33.5 percent above the recession low hit in April 2009. Less factory production has sapped a critical source of growth and jobs in the United States. The trend is expected to keep growth and hiring tepid through the November elections.
Unemployment: The number of Americans seeking unemployment benefits declined by 26,000 last week to a seasonally adjusted 359,000.
The Labor Department said Thursday that the four-week average, a less volatile measure, declined 4,500 to 374,000. That’s the first drop in six weeks.
Still, hiring hasn’t picked up enough to quickly lower the unemployment rate.
U.S. employers added only 96,000 jobs last month, 9,000 of which were utilities workers returning to work after a strike, below the 141,000 in July and much lower than the average 226,000 added in the first three months of the year.
U.S. Economic Growth: The U.S. economy grew at an even more sluggish pace in the April-June quarter than previously estimated.
The overall economy grew at an annual rate of 1.3 percent in the spring, down from its previous estimate of 1.7 percent growth, the Commerce Department said Thursday. The big revision reflected that the government slashed its estimate of crop production by $12 billion.
About half of the downward revision to growth came from the decline in farm inventories. But other areas were weaker as well including slower consumer spending and less growth in exports.
The 1.3 percent growth in the spring followed a sluggish 2 percent growth rate in the first quarter, rates too slow to lower unemployment.
EU v. U.S.: The European Union is seeking some $12 billion in sanctions against the United States as part of a long-running dispute before the World Trade Organization involving subsidies to plane makers Airbus and Boeing.
The Geneva-based trade body said Thursday that the EU plans request on Oct. 23 the right to impose the sanctions.
On Monday, the U.S. claimed it had complied with a March WTO ruling against illegal subsidies to Boeing by stopping some payouts to the company through NASA and the Pentagon and by removing some beneficial tax and funding policies.
The WTO panel has also ruled that European governments provided $18 billion in subsidies to Airbus – though not all were deemed illegal.
China: China‘s biggest steelmaker said Thursday it has shut down a mill in Shanghai in a new sign of weakening growth in the world’s second-largest economy.
Baosteel Group’s announcement adds to a drumbeat of bad news including a decline in trade and corporate profits despite two interest rate cuts and higher government spending on public works construction. Growth fell to a three-year low in the latest quarter and officials including President Hu Jintao have warned it could fall further before rebounding.
Baosteel said it was closing its mill in Shanghai’s Luojing district to avoid mounting losses at the facility amid weak demand for steel plate that is used in shipbuilding and construction.
China’s economic growth fell to 7.6 percent in the three months ended in June. That is robust by the standards of the United States and Japan, where growth this year is forecast in low single digits, but is painful for Chinese companies that rely on high growth to drive demand for new factories, apartments and other assets.
U.S. Futures: U.S. stock futures are rising, helped by expectations the People‘s Bank of China will soon take more steps to combat a slowdown in the world’s No. 2 economy.
Dow futures are up 66 points at 13,411. The broader S&P 500 futures are up 7 points at 1,434. Nasdaq futures are up 11 points at 2,786.