U.S. business spending plans, jobs data support growth outlook

Orders for long-lasting U.S. manufactured goods in August posted their biggest drop on record after an aircraft-related boost, but a rebound in business spending plans pointed to underlying strength in the economy.

The economic outlook also got a lift from other data on Thursday showing only a marginal increase in the number of people filing new claims for unemployment benefits last week.

The Commerce Department said Thursday durable goods orders, items ranging from toasters to aircraft that are meant to last three years or more, dropped 18.2 percent, the largest decline since the series started in 1992.

That partially reversed July's aircraft-driven record 22.5 percent surge. August's decline was in line with expectations.

Orders for the volatile transportation category declined 42.0 percent last month as civilian aircraft orders tumbled 74.3 percent. Transportation orders had soared 315.6 percent in July.

Boeing (BA.N) reported on its website that it had received 107 orders last month, a third of July's outsized gains. Orders for automobiles fell 6.4 percent after rising 10.0 percent the prior month.

The underlying trend in new orders, however, is up and further gains are likely in the months ahead.

A manufacturing survey early this month showed a measure of new orders jumped to a near 10-1/2-year high in August and businesses showed an increased appetite for capital spending.

In a separate report, the Labor Department said initial claims for state unemployment benefits increased 12,000 to a seasonally adjusted 293,000 for the week ended Sept. 20.

Economists had forecast claims rising to 300,000 last week.

The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 1,250 to 293,500.

Claims are hovering near their pre-recession levels, an indication that labor market conditions are tightening despite August's sharp slowdown in job growth.

The dollar held modest gains versus the yen and the euro after the data. Prices for U.S. Treasury debt were marginally higher.

Manufacturing, one of the pillars of the economy, is being supported by firming domestic demand, which is helping to offset some of the weakness due to slowing growth in the euro zone and China.

Excluding transportation, durable goods orders rose 0.7 percent after falling 0.5 percent in July.

Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, rose 0.6 percent. The so-called core capital goods orders fell by a revised 0.2 percent in July, which was previously reported as a 0.7 percent decline.

Core capital goods shipments edged up 0.1 percent last month after July's upwardly revised 1.9 percent increase. Shipments of these goods are used to calculate equipment spending in the government's gross domestic product measurement.

That could see economists tweak their third-quarter GDP growth estimates, which currently range as high as a 3.5 percent annual pace.

Core capital goods shipments were previously reported to have increased 1.5 percent in July.

Unfilled orders for core capital goods increased 1.2 percent last month after rising 1.0 percent in July, a building up of backlogs that will keep the nation's factories busy for a while.

Durable goods inventories rose 0.4 percent last month.