Back-to-school deals help spur retail uptick

The Associated Press

American shoppers, taking advantage of deep discounts and tax-free holidays, opened up their wallets a little more for back-to-school spending compared with last year, giving some retailers better-than expected gains for August.

The results provided a sliver of hope for the recovery. Still, the retailers’ gains mask underlying weakness in consumer spending, as they’re being compared with declines a year ago, and worries still abound about the critical holiday season.

Shoppers remain selective and are focusing on the necessities.

The International Council of Shopping Centers’ index of 31 major retailers was up 3.2 percent in August, following a 2.8 percent gain in July. August’s figure was a little better than the 3 percent increase forecast but is being compared with a 2.0 percent drop a year ago.

Spending on many nonessentials, such as fashions, is still below 2008 and are roughly equal to five years ago, according to MasterCard Advisors’ SpendingPulse, which tracks all transactions including checks.

Mortgage rates hit low of 4.32 percent

Bloomberg News

Mortgage rates dropped to a record, the 11th straight week of matching or setting a new low, reducing borrowing costs for homebuyers as demand slumps.

The average rate for a 30-year fixed mortgage fell to 4.32 percent in the week ended Thursday from 4.36 percent, Freddie Mac said in a statement. That was the lowest since the McLean, Va.-based company began compiling the data in 1971. The average 15-year rate was 3.83 percent, also a record.

Low home-loan rates have yet to boost home sales, depressed by unemployment and the end of a federal homebuyer tax credit. Sales of new and previously owned homes fell to the lowest level on record in July, according to reports last week from the Commerce Department and National Association of Realtors.

The number of contracts to purchase previously owned houses rose in July, a sign the market may be starting to stabilize. The index of pending home resales rose 5.2 percent after a revised 2.8 percent drop the prior month, according to the National Association of Realtors.

Initial jobless claims show slight decline

Market Watch

The number of people applying for unemployment benefits fell by 6,000 to 472,000 in the week ended Aug. 28, but first-time claims remain at an elevated level, government data showed Thursday.

“Claims have been uncomfortably high for a while,” said senior economist Ryan Sweet of Moody’s Economy.com.

Economists surveyed by MarketWatch had expected initial claims to total about 473,000 — the same as the week before.

But claims in the prior week were revised up by 5,000 to 478,000, basically canceling out the latest decline.

The four-week average of initial claims — a better gauge of employment trends than the volatile week-to-week number — declined 2,500 to 485,500, according to data released by the Labor Department.

The U.S. likely lost 105,000 nonfarm jobs, mainly because temporary Census workers were let go, with private employers probably adding a scant 30,000 workers, a MarketWatch survey shows.

Aircraft orders offset weak factory activity 

The Associated Press

Orders to U.S. factories managed a slight gain in July as a surge in demand for commercial aircraft helped offset widespread weakness in other areas.

Factory orders edged up 0.1 percent, the first increase after two months of declines, the Commerce Department reported Thursday. But the strength came in the volatile transportation sector. Excluding transportation, orders were down 1.5 percent, the biggest drop in this category in 16 months.

Manufacturing has been the standout performer so far in this recovery, with American companies benefiting from stronger growth in China and other developing nations.

Concerns that manufacturing could be faltering were eased on Wednesday with a report from the Institute for Supply Management showing that its closely watched gauge of manufacturing activity posted a stronger-than-expected reading of 56.3 in August. Additionally, a manufacturing index for China also showed a solid gain and car sales in that country surged.