Fundamental Updates \Nick Nasad \ 10:43 AM EST \ November 25th, 2009
Jobless Claims Fall Below 500K, Figure Hits Lowest Since Nov 2008
Initial claims for jobless benefits fell below the 500K level for the first time since early January. Claims declined by 35K to 466K in the week ended Nov. 21, which was the lowest level since September 2008. Total claims lasting more than one week, or continuing claims, fell as well to 5.42 million from 5.61 million. The four-week moving average of initial claims, which smooths out the volatility of the headline number, moved below the 500K level and is a positive sign for the labor market.
Jobless claims peaked in April, and have been steadily falling. A level below 500K, if sustained for several weeks, could mean that the US economy is close to achieving positive monthly job growth numbers. A rise in the non-farm payroll report is expected at some point over the next three to six months, especially if the trend in jobless claims, which has been very persistent since the end of August, continues.
Spending by Americans bounced back in October, as incomes rose slightly more than expected and inflation expectations remained low. Spending rose by 0.7%, following a 0.6% slide in September. Consumer spending makes up 70% of the US economy and was up 2.9% annual rate during the third quarter, though this was revised lower yesterday from the advance version which showed consumption up 3.4%. That led to a softer rebound for the economy than originally thought. Today’s data at least shows a positive start to the 4th quarter, since both consumer spending and incomes rose by more than expected.
Incomes grew 0.2%, when forecasts called for a 0.1% rise, and the figures for the two previous months were revised higher as well. Incomes rose by 0.2% in September and 0.3% in August, compared to previous estimates of a flat reading in September and a 0.1% increase the previous month. More money in the pockets of consumers can translate to more spending, however unemployment is above 10% which can limit demand.
A measure of inflation from the report – the core price index for personal consumption expenditures, which excludes volatile food and energy prices – rose a monthly 0.2% and by 1.4% on the year. This figure is closely watched by Fed officials for inflationary pressures. Currently Fed officials see core inflation around .145% in 2009, 1.25% in 2010, and 1.3% in 2011.
Durable Goods Orders Unexpectedly Fall, as Military Orders Decline
Durable goods orders unexpectedly fell in October, sliding 0.6% for the month, when expectations had it rising. Still, the data did show a large modest upward revision to September’s figures. Demand for durables, which are designed to last more than 3 years, was hampered by a drop in orders by the defense sector. Excluding defense, all other durables increased by 0.4% in October after going higher in September.
Orders excluding transportation, which is the “core” number, fell 1.3%, following a 1.8% climb in September. That shows that transportation related goods picked up the headline number as they grew 1.5%. While motor vehicle orders dipped 0.1%, there was a 50.8% jump in orders for non-defense planes. In a weak sign, a key barometer for capital spending – non-defense capital goods ex. aircraft – declined 2.9%, wiping away the 2.6% increase seen in September.
The economy stopped shrinking last summer, but with unemployment topping 10%, the recovery is expected to be slow.
Non-Defense Capital Goods ex. Aircraft: -2.9%, pr. 2.6% (Sep),
-0.4% (Aug), -1.3% (Jul), 3.6% (Jun), 4.8% (May), -1.5% (Apr)
New Home Sales Jump 6.3% in October
Following on the heels of better than expected existing home sales figures, new home sales rose 6.2%, climbing to an annual rate of 430K for the month of OCtober. The figure handily beat expectations and shows that the looming expiration of an $8,000 tax credit for home buyers would scare off buyers in October. Unlike sales of existing home, new home sales are recorded with the signing of a sales contract and not the closing. The government wound up expanding the tax credit till April, a move made earlier this month that could continue to be a boost for the housing market. Inventories of new home sales shrank to 239K, a 6.7 month’s supply at the current sales rate. This was at a 7.4 month supply at the end of September.
Nov. UMich Consumer Confidence Up from Preliminary Version, Down Compared to Oct.
US consumer confidence fell in November, with the final version showing the UMich sentiment index at 67.4, a decline from the 70.6 seen in October and 73.5 in September. That’s a worrisome sign as “consumers cite their deteriorating finances as well as their uncertainty about future job and income prospects more than ever before, and this has made them very cautious spenders,” the report noted. Still, in one bit of silver lining, the final version was higher than the preliminary release which had slid all the way to 66.0. Weak consumer confidence data, especially the drop in current conditions could spell a rough 4th quarter for spending.
US Data Wrap-Up: Jobless Claims Fall Below 500K, Durable Orders Slide, Personal Incomes and Spending & more…
Fundamental Updates \ Nick Nasad \ 10:43 AM EST \ November 25th, 2009Jobless Claims Fall Below 500K, Figure Hits Lowest Since Nov 2008
Initial claims for jobless benefits fell below the 500K level for the first time since early January. Claims declined by 35K to 466K in the week ended Nov. 21, which was the lowest level since September 2008. Total claims lasting more than one week, or continuing claims, fell as well to 5.42 million from 5.61 million. The four-week moving average of initial claims, which smooths out the volatility of the headline number, moved below the 500K level and is a positive sign for the labor market.
Jobless claims peaked in April, and have been steadily falling. A level below 500K, if sustained for several weeks, could mean that the US economy is close to achieving positive monthly job growth numbers. A rise in the non-farm payroll report is expected at some point over the next three to six months, especially if the trend in jobless claims, which has been very persistent since the end of August, continues.
Current Release: The Department of Labor
Personal Spending and Incomes Rise More Than Expected in October
Provided by: Commerce Department
Current Release: News Release
Spending by Americans bounced back in October, as incomes rose slightly more than expected and inflation expectations remained low. Spending rose by 0.7%, following a 0.6% slide in September. Consumer spending makes up 70% of the US economy and was up 2.9% annual rate during the third quarter, though this was revised lower yesterday from the advance version which showed consumption up 3.4%. That led to a softer rebound for the economy than originally thought. Today’s data at least shows a positive start to the 4th quarter, since both consumer spending and incomes rose by more than expected.
Incomes grew 0.2%, when forecasts called for a 0.1% rise, and the figures for the two previous months were revised higher as well. Incomes rose by 0.2% in September and 0.3% in August, compared to previous estimates of a flat reading in September and a 0.1% increase the previous month. More money in the pockets of consumers can translate to more spending, however unemployment is above 10% which can limit demand.
A measure of inflation from the report – the core price index for personal consumption expenditures, which excludes volatile food and energy prices – rose a monthly 0.2% and by 1.4% on the year. This figure is closely watched by Fed officials for inflationary pressures. Currently Fed officials see core inflation around .145% in 2009, 1.25% in 2010, and 1.3% in 2011.
Durable Goods Orders Unexpectedly Fall, as Military Orders Decline
Durable goods orders unexpectedly fell in October, sliding 0.6% for the month, when expectations had it rising. Still, the data did show a large modest upward revision to September’s figures. Demand for durables, which are designed to last more than 3 years, was hampered by a drop in orders by the defense sector. Excluding defense, all other durables increased by 0.4% in October after going higher in September.
Orders excluding transportation, which is the “core” number, fell 1.3%, following a 1.8% climb in September. That shows that transportation related goods picked up the headline number as they grew 1.5%. While motor vehicle orders dipped 0.1%, there was a 50.8% jump in orders for non-defense planes. In a weak sign, a key barometer for capital spending – non-defense capital goods ex. aircraft – declined 2.9%, wiping away the 2.6% increase seen in September.
The economy stopped shrinking last summer, but with unemployment topping 10%, the recovery is expected to be slow.
Provided by: U.S. Census Bureau
Ex. Trans.: -1.3%, forecast 0.7%, pr. 1.8% R+ (Sep), -0.4% (Aug),
0.8% (Jul), 2.5% (Jun), 0.8% (May), 0.8% (Apr), -2.7% (Mar),
Ex. Defense: 0.4%, pr. 1.8% (R+ from 0.5%), -2.6% (Aug), 4.3% (Jul),
0.7% (Jun), 1.4% (May), 1.0% (Apr), -2.3% (Mar), 1.7% (Feb), )
Non-Defense Capital Goods ex. Aircraft: -2.9%, pr. 2.6% (Sep),
-0.4% (Aug), -1.3% (Jul), 3.6% (Jun), 4.8% (May), -1.5% (Apr)
New Home Sales Jump 6.3% in October
Following on the heels of better than expected existing home sales figures, new home sales rose 6.2%, climbing to an annual rate of 430K for the month of OCtober. The figure handily beat expectations and shows that the looming expiration of an $8,000 tax credit for home buyers would scare off buyers in October. Unlike sales of existing home, new home sales are recorded with the signing of a sales contract and not the closing. The government wound up expanding the tax credit till April, a move made earlier this month that could continue to be a boost for the housing market. Inventories of new home sales shrank to 239K, a 6.7 month’s supply at the current sales rate. This was at a 7.4 month supply at the end of September.
Provided by: US Census Bureau
Most Current Release: PDF
Sales m/m: 6.2%, pr. -3.6% (Sep), 1.0% (Aug), 9.6% (Jul),
9.1% (Jun), -0.6% (May), 0.3% (Apr), -3.0% (Mar), 10.0% (Feb)
Nov. UMich Consumer Confidence Up from Preliminary Version, Down Compared to Oct.
US consumer confidence fell in November, with the final version showing the UMich sentiment index at 67.4, a decline from the 70.6 seen in October and 73.5 in September. That’s a worrisome sign as “consumers cite their deteriorating finances as well as their uncertainty about future job and income prospects more than ever before, and this has made them very cautious spenders,” the report noted. Still, in one bit of silver lining, the final version was higher than the preliminary release which had slid all the way to 66.0. Weak consumer confidence data, especially the drop in current conditions could spell a rough 4th quarter for spending.
Provided by: Reuters
Official Release: PDF
Current Ind.: 68.8, pr. 73.7 (Oct), 73.4 (Sep), 66.6 (Aug), 70.5 (Jul),
73.2 (Jun), 67.7 (May), 68.3 (Apr), 63.3 (Mar), 65.5 (Feb), 66.5 (Jan)
Expectations: 66.5, pr. 68.6 (Oct), 73.5 (Sep), 65.0 (Aug), 63.2 (Jul),
69.2 (Jun), 69.4 (May), 63.1 (Apr), 53.5 (Mar), 50.5 (Feb), 57.8 (Jan)
12-Mo Infl.: 2.7%, pr. 2.9% (Oct), 2.2% (Sep), 2.8% (Aug),
2.9% (Jul), 3.1% (Jun), 2.8% (May), 2.8% (Apr), 2.0% (Mar)
5-Yr Infl.: 3.0%, pr. 2.9% (Oct), 2.8% (Sep), 2.8% (Aug),
3.0% (Jul), 3.0% (Jun), 2.9% (May), 2.8% (Apr), 2.6% (Mar)