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Technology Stocks : Applied Materials No-Politics Thread (AMAT) -- Ignore unavailable to you. Want to Upgrade?

To: matt dillabough who wrote (15172)	6/2/2005 2:09:02 PM
From: Proud_Infidel	Respond to of 25522

Factory Orders Rise to Five-Month High Thursday June 2, 2:00 pm ET By Martin Crutsinger, AP Economics Writer Productivity, Factory Orders Advance, but Labor Costs Rise; New Jobless Claims Hit 14-Month High WASHINGTON (AP) -- Orders to U.S. factories advanced by 0.9 percent in April, the fastest clip in five months, while worker productivity at the start of the year was better than originally thought and the nation's retailers enjoyed strong sales despite a cold spring. But all the economic news released Thursday wasn't good. Labor costs, a key factor influencing inflation rates, rose sharply over the past six months. The Commerce Department said factory orders rose by 0.9 percent in April as demand for durable goods posted a solid 1.9 perent gain, the first increase in four months, led by strength in demand for autos and aircraft. Those gains offset a 0.2 percent decline in orders for non-durable goods, items not expected to last three years. Meanwhile, the Labor Department reported that productivity went up at an annual rate of 2.9 percent in the quarter after surging a revised 7.7 percent in the final three months of 2004, gains certain to raise concerns at the Federal Reserve about inflationary pressures. "This is seriously bad news for the Fed -- costs appear to be spiraling rapidly -- and it strongly argues for substantially higher interest rates," said Ian Shepherdson, chief U.S. economist at High Frequency Economics. But other analysts were not as concerned, noting that the big fourth quarter surge reflected end-of-the-year bonuses that should not trigger widespread wage pressures. "The one-time nature of the payouts suggests that there is little inflationary implication from these numbers," said Merrill Lynch economist Sheryl King. In other economic news Thursday, the nation's retailers reported generally upbeat sales figures for May with luxury stores such as Nordstrom Inc. and teen retailers including Bebe Stores Inc. among the big winners. And in a final report, the Labor Department said the number of Americans filing new claims for unemployment benefits shot up by 25,000 last week, the biggest weekly increase in 14 months. Labor Department analysts blamed the increase, which pushed total claims to 350,000 last week, on temporary layoffs in the auto industry. Wall Street had a muted reaction to all the economic news with the Dow Jones industrial average with the Dow Jones industrial average down about 13 points in afternoon trading. While the jump in jobless claims was the biggest one-week gain since a rise of 27,000 in late January 2004, analysts noted the temporary nature of the auto layoffs and said they were still looking for solid gains in employment going forward. They predicted Friday's jobless report would show the unemployment rate holding steady at 5.2 percent with a solid 180,000 new jobs creaed last month. The report on factory orders showed no change from in the overall increase for durable goods from an original estimate last week of a rise of 1.9 percent. The 0.2 percent drop in non-durable goods followed a huge 3 percent rise in March and a 1 percent decline in February. The government's new report on productivity and unit labor costs reflected major alterations to previous data which had showed unit labor costs rising at a much more measured pace. The 7.7 percent jump in labor costs in the fourth quarter was the fastest quarterly gain since an 8.9 percent surge in the third quarter of 2000. It had earlier been reported as a much more modest 1.7 percent increase. Labor Department analysts said the sharp upward revision occurred because of revised source data. The third quarter performance of unit labor costs was revised to show a gain of 4.5 percent while the second quarter gain last year was changed to an increase of 1.8 percent. The increases were all above the small 0.8 percent rise for all of 2004 and the actual decline of 0.3 percent in unit labor costs in 2003. The upward revisions were certain to prompt the Federal Reserve to examine whether the economic recovery from the 2001 recession was beginning to trigger higher wage pressures that could spur unwanted inflation. The Fed has been increasing a key interest rate by gradual quarter-point moves over the past year and has so far pledged to keep moving at a moderate pace because of officials' belief that inflation pressures outside of energy have remained well contained.