By Lucia Mutikani
WASHINGTON (Reuters) - The number of U.S. workers drawing jobless aid jumped to record high in mid-February, while the recession undercut demand for manufactured goods last month and sent new homes sales to their lowest since at least 1963.
The worsening global economic slump pushed new orders for long-lasting U.S. manufactured goods to a six-year low in January. The housing market, at the center of the downturn, continued to slow and sales of new home sales hit a record trough in January, according to government reports.
Companies are cutting staff to lower costs as demand slumps and banks limit access to credit. However, rising unemployment is sapping consumer spending and threatens to create a downward economic spiral.
The government has stepped in with a $787 billion stimulus package to put a floor under the flagging economy.
U.S. stocks shrugged off the data and investors focused on news that the government could request more money to shore up banks. Treasury debt prices, which normally rise on grim economic data, were weighed down by a historic weekly issuance of $94 billion of government debt.
"The weak reports reinforce the view that problems in the U.S. economy are more significant than what had been priced in the market," said Matthew Strauss, senior currency strategist at RBC Capital Markets, Toronto.
The number of people remaining on the benefits roll after drawing an initial week of assistance increased by 114,000 to a record 5.112 million in the week ended February 14, the most recent week for which data is available, the Labor Department said.
Initial claims for state unemployment insurance benefits increased to a seasonally adjusted 667,000 last week from 631,000 the prior week, the department said. It was the highest reading since October 1982.
"The upward trend in unemployment claims suggests that we haven't seen the worst in the labor market situation yet, probably leading to higher unemployment rates," said Gary Thayer, senior economist at Wachovia Securities in St. Louis, Missouri.
DURABLE ORDERS PLUNGE
A separate report from the Commerce Department showed new U.S. orders for long-lasting manufactured goods fell for a sixth consecutive month in January, as a global slump crimped exports and domestic spending faltered.
Durable goods orders dropped 5.2 percent to $163.8 billion in January, the lowest level since December 2002, from a 4.6 percent decline in November.
"It certainly shows the deterioration in the economy," said John Boo, director of equity trading at Ferris, Baker Watts Inc in Baltimore.
"They're going to be doing a lot less business and they're going to need fewer employees. The news confirms fears that we're not going to get any kind of immediate turnaround, at least in the manufacturing sector."
New orders excluding transportation dropped 2.5 percent in January, while motor vehicles and parts fell 6.4 percent.
A closely watched proxy for business spending, non-defense capital goods orders excluding aircraft, fell 5.4 percent in January from a 5.8 percent drop in December.
In another report, the Commerce Department said new home sales plunged 10.2 percent to a 309,000 annual pace, the lowest on records dating back to 1963, from 344,000 in December.
The median sales price in January tumbled 13.5 percent to $201,100 from a year earlier, the lowest level since December 2003, the department said. The percentage decrease was the largest since July 1970.
The inventory of homes available for sale in January was at 342,000, the lowest in more than five years. However, because of the weak January sales pace, the supply of homes available for sale now equals 13.3 months, a record high.
Analysts are closely watching the supply of houses on the market for signs as to when the housing downturn will start bottoming. Many believe stability could return in the second half of the year, but much depends on whether the government's plans to prop up the fractured financial sector succeeds.
The fortunes of the bleeding U.S. economy rest largely with the restoring confidence in the banking and housing sectors.
(Additional reporting by Alister Bull in Washington and Ellen Freilich in New York; Editing by Tom Hals)
