New orders at factories fell more than expected in August and jobless claims climbed last week, government reports showed on Thursday, but markets awaited more conclusive evidence of the impact of the housing slump and credit crisis on the economy.
Factory orders fell 3.3 percent in August, the largest decline since January, on big drops in aircraft and auto orders, a Commerce Department report showed.
Analysts polled by Reuters were expecting factory orders to slip 2.6 percent.
"(The number) was a little weaker than expected, but factory orders are pretty volatile. So I don't think it's a significant new indication of weakness," said Charles Lieberman, chief investment officer of Advisors Capital Management LLC in Paramus, New Jersey.
"There's a lot of interest in tomorrow's employment report," he added.
Orders were dragged down by a 39.9 percent tumble in the volatile non-defense aircraft category, and an 8.5 percent plunge in automotive orders, the sharpest decline in that category since December 2002, the Commerce Department said.
Orders for all types of transportation equipment slid 11.1 percent.
However, even when transportation orders were stripped out, factory orders dipped 1.7 percent, the second decline in three months. Excluding defense products, orders slipped 3.8 percent.
Orders for non-defense capital goods excluding aircraft, viewed as a reliable indicator of business investment, fell 0.5 percent, a slimmer drop than originally reported.
JOBLESS CLAIMS RISE
Meanwhile, the number of U.S. workers filing new claims for jobless aid rose by 16,000 last week, the Labor Department said on Thursday.
Initial claims for state unemployment insurance benefits jumped to 317,000 in the week ended September 29 from an upwardly revised 301,000 the prior week.
The new claims figures exceeded Wall Street economists' forecasts for rise to 310,000 in new jobless claims from the preliminary reading of 298,000 in the week ended September 22.
"Jobless claims bounced back after two weeks of declines, but claims are still at a relatively low level that's consistent with a healthy labor market," said Gary Thayer, chief economist for A.G. Edwards and Sons in St. Louis.
"There's no sign yet from these data that the economy is in recession," Thayer said.
The four-week moving average of new claims, watched for trends in the labor market, edged up to 312,750 in the week ended September 29 from 312,250 the week before.
The number of people who remained on state benefit rolls after drawing an initial week of aid fell by 10,000 to 2.54 million in the week ended September 22, the latest period for which figures were available. Economists had forecast 2.55 million.
The rebound in new claims reverses a two-week pattern of declines and takes them back up to the level seen earlier this month.
Two reports released Wednesday on the health of the jobs market -- from ADP Employer Services and Challenger, Gray and Christmas -- supported the impression that labor markets were softening, partly because of weaker housing and credit markets, but were not in a free fall.
In a poll taken last week, economists forecast the U.S. economy will add a solid but unspectacular 94,000 non-farm jobs in September, rebounding from the first drop in monthly hiring in four years during August.
Analysts forecast the September unemployment rate will tick up to 4.7 percent from 4.6 percent.
(Additional reporting by Nancy Waitz and Ellis Mnyandu)