Sunday, March 23, 2008

Economic data point to recession

Economic data point to recession

By Burton Frierson

Go To Original

NEW YORK -- Evidence of a U.S. recession mounted Thursday with reports showing mid-Atlantic factory activity in its worst slump since the start of the Iraq war and more workers claiming jobless benefits.

Separately, the private Conference Board reported its forecasting gauge fell for the fifth straight month in February, bolstering the view that the economy has stalled and could face a contraction.

The Economic Cycle Research Institute, a New York-based independent forecasting group, added a further note of pessimism, saying the U.S. economy is "unambiguously" in a recession.

A government report showed that the number of U.S. workers filing initial claims for unemployment aid climbed 22,000 last week. The overall number on the benefit rolls rose to a 3 1/2 -year high a week earlier.

Factory activity in the mid-Atlantic region shrank for the fourth consecutive month in March, according to the Philadelphia Federal Reserve Bank's business activity index, which came in at minus 17.4 this month.

"The key message from this survey is that things are quite bad, but that sentiment has, so far, weakened further than hard activity," Ian Shepherdson, chief U.S. economist at High Frequency Economics, said about the report.

Even so, the index was up from February's dismal reading of minus 24.0. But it marked the longest streak of contractions since the February-to-May stretch of 2003.

The Conference Board said its leading economic indicators index fell 0.3%, meeting analyst expectations and coming after a 0.4% drop in January, which was originally reported as a 0.1% decline.

The last time the leading index worsened for five consecutive months was in 2001, during the last major U.S. recession, the board said.

The Labor Department's report suggested a further deterioration in the job market, although it said increases in first-time claims last week and the week before reflected, at least in part, an autoworker strike.

It said 378,000 initial claims for jobless benefits were filed in the week that ended Saturday, up from 356,000 the week before. Economists had expected a rise to just 360,000.

The increase pushed the four-week moving average, a gauge of underlying job-market health, to 365,250, the highest since October 2005 in the aftermath of Hurricane Katrina.

The number of idled workers who continued to draw benefits in the week that ended March 8, the latest week for which the data were available, increased 32,000 to 2.865 million. This was the highest reading since August 2004.

The Economic Cycle Research Institute said its weekly leading index fell to 130.8 in the week of March 14 from 132.1 in the previous week.

No comments: