US economic data looks better on closer inspection

WASHINGTON (AP) — At first glance, a batch of U.S. economic data released Thursday looked dispiriting. Companies slashed orders for factory goods. The government cut its most recent growth estimate. And fewer people signed contracts to buy homes.

Yet a peek beneath the headlines, and a separate report on applications for unemployment aid, suggested that the economy is sturdier than it might appear.

“Don’t panic,” Paul Ashworth, chief U.S. economist at Capital Economics, said in a research note.

The data released Thursday showed that:

Companies cut orders for long-lasting goods by 13.2 percent in August. The drop reported by the Commerce Department was the steepest in more than three years, but it was caused mainly by a plunge in volatile aircraft orders. Excluding transportation equipment, orders fell just 1.6 percent. And a category that reflects business investment plans rose 1.1 percent — its first increase since May.

The economy grew at a scant 1.3 percent annual rate in the April-June quarter. That was down from the 1.7 percent rate the government had previously estimated. But the downward revision was due largely to the Midwest drought, which cut farm production. Once the drought eases and crop yields rebound, U.S. farms should boost growth, Ashworth noted.