April durables orders weak, jobless claims rise

WASHINGTON (Reuters) - New orders for U.S. durable goods rose by a weaker-than-expected 0.6 percent in April as volatile transportation orders fell, while initial claims for jobless benefits rose by 15,000 in the latest week, government reports showed on Thursday.

The tepid April increase for durable goods -- often costly manufactured items meant to last three years or more -- followed a sharp upward revision in the March figure to a gain of 5.0 percent from a previously reported figure of 3.7 percent, the Commerce Department said.

The April increase was well below the 1.0 percent rise in total durable goods orders forecast by Wall Street economists in a Reuters poll. The March figure was revised sharply upward to a 5.0 percent gain from a previously reported figure of 3.7 percent.

But some analysts said the data was consistent with recent trends in the economy and did not offer any strong signals to the Federal Reserve on whether to cut interest rates.

"Jobless are as expected, indicating similar conditions on the employment situation with fairly moderate growth and still working off the housing situation, said Robert Lutts, chief investment officer at Cabot Money Management in Salem, Massachusetts.

"Durables ex-transportation was a little more favorable and this will be where we will get earnings growth from. This is more of the same in the economy, a little stronger on the spending and investment side. I think the markets' take on this will be that it is similar to what we have had."

"I would say (the Federal Reserve) will continue to sit on their hands," he added

Orders for non-defense capital goods excluding aircraft, seen by economists as a proxy for business investment, rose 1.2 percent in April after a downwardly revised 4.4 percent increase in March. Analysts had predicted a 0.8 percent rise in this category.

U.S. Treasury debt prices fell in response to the better-than-expected figure on business investment, erasing earlier gains, while the dollar rose slightly against the euro but was steady against the yen.

Markets also were awaiting U.S. new home sales data at 10 a.m. (1400 GMT). A Reuters poll showed that sales data likely held steady in April as better weather and price cutting offset the impact of tighter mortgage lending standards that shrank the pool of potential buyers.

CIVILIAN AIRCRAFT, AUTOMOTIVE ORDERS FALL

The shift in durable goods orders between April and March was due largely to changes in the volatile transportation sector, where orders fell 1.3 percent after a 13.6 percent rise in March.

April non-defense aircraft orders fell 10.7 percent after a 53.6 percent rise in March, while motor vehicle and parts orders fell 1.9 percent after rising 2.7 percent in March.

Stripping the transportation goods out, durable goods orders rose by 1.5 percent in April, the same pace as in March after a small upward revision. Economists had forecast that durables orders excluding transportation would rise 0.6 percent in April.

Durable goods orders excluding defense rose 0.6 percent after an upwardly revised 5.2 percent gain in March.

4-WEEK JOBLESS TREND HITS YEAR LOW

The Labor Department said that despite the 15,000 increase in new jobless claims last week, a more reliable barometer of labor trends dropped to its lowest level in more than a year.

Initial filings for state unemployment insurance aid rose to a seasonally adjusted 311,000 in the week ended May 19, from a revised 296,000 in the prior week, above Wall Street economists' expectations for an increase to 305,000.

But the four-week moving average of claims, which irons out weekly variations to give a clearer picture of underlying trends in the labor market, fell for a fourth successive week. This average dropped to 302,750 from a revised 306,250 in the prior week, hitting the lowest level since late February last year.

The total number of unemployed still on the benefit rolls after drawing an initial week of aid climbed to 2.53 million in the week ended May 12, the latest period for which the data were available, from 2.47 million a week earlier. Economists had forecast that continuing claims would be slightly lower at 2.50 million.