U.S. jobs picture improving

The number of Americans filing new claims for unemployment aid unexpectedly fell last week, but continued weakness in business spending on capital goods suggested slower economic growth in the fourth quarter.

Initial claims for state jobless benefits fell 10,000 to a seasonally adjusted 316,000, the Labor Department said on Wednesday. The second straight week of declines defied economists' expectations for a rise in claims to 330,000 and raised hopes for strong payroll growth in November.

Employers added 204,000 new jobs to their payrolls last month, far more than expected, fanning speculation that the U.S. Federal Reserve might start to wind down its economic stimulus sooner rather than later.

But while the labor market picture is firming, businesses appear to be cautious about investment spending.

A separate report from the Commerce Department showed non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, dropped 1.2% last month.

It was the second monthly decrease in these so-called core capital goods. The data surprised Wall Street economists who had expected a gain, partly because private surveys of national factory activity had shown strength in October.

"The picture of manufacturing strength from survey data is not being captured in the government-collected data on new orders and this divergence is a puzzle," said John Ryding, chief economist at RDQ Economics in New York.

Nevertheless, the latest report suggested some ebbing in the factory sector's momentum, and hinted that a 16-day partial government shutdown last month hurt business confidence.