Orders for durable goods, excluding transportation, held flat.  New orders for durable goods fell 2.4 percent in August, according to the Census Bureau’s Advance Report on Durable Goods Manufacturers’ Shipments, Inventories and Orders.  This was the second decline in the last three months, although there was a 4.8 percent increase in July.  Economists were expecting a 1.0 percent increase for August. Disappointment in the unexpected drop in the top line number was tempered by the fact that, leaving out the volatile transportation component, new orders were flat over the month. New orders for transportation equipment fell 9.3 percent in August, driven by large declines in orders for nondefense aircraft and parts.  Despite large increases in sales due to the “Cash For Clunkers” program, new orders for motor vehicles and parts increased only slightly (0.4 percent) over the month, following a 1.6 percent increase in July (although the increase in auto parts and orders may show up in the revised August or September data).  Manufacturers’ inventories fell for the eighth consecutive month, declining 1.3 percent in August.  Inventories have shrunk by 8.9 percent over the past twelve months, suggesting that an eventual pickup in economic activity and consumer demand may jumpstart manufacturing activity.

Initial claims for unemployment insurance fell for the third straight week.  Claims for the week ending September 19th came in at 530,000, a drop of 21,000 from the preceding week.  The four-week moving average of initial claims fell to 553,500, the lowest level in more than seven months (since the fourth week of January 2009).  The decline is a strong indication that while employers continued to cut jobs in September, it was at a slower pace.  The four-week moving average of continuing claims, which lag initial claims data by one week, continued to fall.  In the week ending September 12th, the average dropped 1,250 to 6,187,250.  The average number of continuing claims has fallen steadily since mid-June, but remains near historically high levels and approximately 3.6 million higher than its pre-recession average of roughly 2.6 million. Recent declines are partially attributable to workers exhausting all available unemployment benefits.  According to the Department of Labor, in the twelve months ending in August 2009, over half (52 percent) of the unemployment benefits claimants exhausted their regular state benefits.  Workers in many states then become eligible for extended benefits or emergency benefits, however additional benefits are not available to workers in all states.  The Bureau of Labor Statistics will release additional information on the labor market situation immediately preceding the JEC’s October 2nd employment hearing.

FOMC: “Economic activity has picked up following its severe downturn.”  As was expected, at the end of its two-day meeting, the Federal Open Market Committee (FOMC) announced on September 23rd that it would leave the target for the federal funds rate at a range of 0 to 0.25 percent, and that the rate would likely remain “exceptionally low” for some time.  In its statement, the FOMC also observed that “economic activity has picked up.”  The pronouncement came one week after Federal Reserve Chairman Ben Bernanke declared the recession was “very likely over” and was a notable improvement from the Committee’s August statement which stated that economic activity was “leveling out.”