WASHINGTON — Economic reports suggest employers are laying off fewer workers, businesses are ordering more computers and appliances, and consumers are spending with more confidence.
Combined, the data confirm the economy is improving, and further job gains are expected in 2011.
The economy’s outlook is brightening even though hiring has yet to strengthen enough to reduce an unemployment rate near 10 percent.
The number of people applying for unemployment benefits fell last week to a seasonally adjusted 420,000, the Labor Department said Thursday.
That’s the second-lowest level since July 2008.
Applications have fallen below 425,000 in four of the past five weeks — a significant improvement after hovering most of the year above 450,000.
But the unemployment rate rose in November to 9.8 percent. And employers added only 39,000 net new jobs.
The economy needs to generate more than 200,000 jobs a month consistently to make a dent in the unemployment rate.
And applications for unemployment benefits need to fall to 375,000 or below before job gains are likely to get to that level, economists say. Applications peaked during the recession at 651,000 in March 2009.
“Don’t forget how many people lost their jobs,” said Tom Porcelli, an economist at RBC Capital Markets, a reference to the more than 7.3 million laid off during the worst recession since the Great Depression. “The unemployment rate is still going to remain high because of all the people out of work.”
Despite months of sluggish hiring, the economy is headed in the right direction. Consumers spent more for the fifth straight month in November, the Commerce Department said. Their incomes rose too. That was because of stock gains — not pay increases. But any spending increase is a sign of greater confidence in the economy. Affluent shoppers, whose spending carries outsize impact, are spending especially freely.
U.S. businesses, sitting on nearly $2 trillion in cash, are parting with a bit more of it.
Companies increased their orders for long-lasting manufactured products, excluding volatile transportation goods, by the sharpest amount in eight months in November. Demand rose for computers, appliances and heavy machinery.
Housing remains a major weight. In November, people bought new homes at a seasonally adjusted annual rate of 290,000 units, the government said. That’s less than half the rate that economists consider healthy.
And it’s barely above the weakest pace in 47 years.
