February 7, 2023

Job and Price Data May Signal the End for Federal Stimulus

Government reports on Thursday suggested an acceleration in job growth in early August and hinted at pockets of pricing power in the sluggish economy. The data could ease concerns among some Federal Reserve officials that inflation has been too low and the job market too weak, drawing the central bank closer to tapering off its economic stimulus program.

While statistics on manufacturing were less encouraging, economists were little fazed and said they merely suggested that the improvement in factory activity was slower than anticipated.

“It looks like the weakness in employment last month was a fluke, and the breadth of gains” in the Consumer Price Index suggest that “there will be less pushback against tapering because of low inflation,” said Ryan Sweet, a senior economist at Moody’s Analytics. “A September taper is still on the table.”

The Fed has indicated that it wants to wind down its monthly purchase of $85 billion in Treasury and mortgage-backed securities, perhaps by September.

First-time applications for state unemployment benefits dropped 15,000 to a seasonally adjusted 320,000, the lowest level since October 2007, the Labor Department said. Economists had expected initial claims to come in at 335,000 last week.

The four-week moving average of new jobless claims, which irons out week-to-week volatility, fell to its lowest level since November 2007.

Carl Riccadonna, a senior economist at Deutsche Bank Securities, said the drop in new jobless claims to prerecession levels was consistent with a pickup in the pace of hiring, if not in August, then at some time in the next couple of months.

“The critical component is going to be the August jobs report,” he said. “If that comes in at least where it was in July, then this is going to keep the Fed on track to initiate tapering at the September meeting” of the Fed’s policy makers.

Employers added 162,000 jobs to their payrolls last month, with the unemployment rate dropping to 7.4 percent.

In another report, the Labor Department said its Consumer Price Index rose 0.2 percent last month, in line with economists’ expectations, as the cost of goods and services including tobacco, apparel and food increased.

The C.P.I. gained 0.5 percent in June. In the 12 months through July, the C.P.I. advanced 2 percent, the largest annualized increase since February, after rising 1.8 percent in June.

The rise in inflation to the Fed’s 2 percent target suggested that the downward drift in prices seen early in the year was over, which could comfort some central bank officials who have warned about the potential dangers of inflation running too low.

Even stripping out energy and food, the core rate of consumer prices still rose 0.2 percent for a third consecutive month. That took the increase over the last 12 months to 1.7 percent after core C.P.I. gained 1.6 percent in June.

The uptick in prices fits with the view of Ben S. Bernanke, the Fed chairman, who has said he considers the low inflation temporary.

James Bullard, the president of the Federal Reserve Bank of St. Louis, who has voiced concern that inflation was still too low, said he was encouraged by July’s rise in consumer prices.

“To the extent that you have got higher inflation numbers in this report, that would be bolstering the notion that inflation would be naturally moving back toward target,” Mr. Bullard told reporters in Louisville, Ky.

Last month, there were increases in the prices of gasoline, transportation and shelter. Medical care services recorded a second month of gains in July. Medical care, which makes up about 10 percent of the core C.P.I., was subdued in April and May.

The news on the factory sector was a bit downbeat, with the Fed reporting that manufacturing output slipped 0.1 percent last month, held down by a 1.7 percent fall in the production of motor vehicles and machinery. That, together with a drop in utilities production, left industrial output unchanged in July.

Separately, the Federal Reserve Bank of New York said its Empire State general business conditions index fell to 8.24 in August from 9.46 in July. A reading above zero indicates expansion. But details of the report were fairly encouraging, with strong gains in the labor market.

Article source: http://www.nytimes.com/2013/08/16/business/economy/job-and-price-data-may-signal-the-end-for-federal-stimulus.html?partner=rss&emc=rss

New Jobless Claims Rise, but Hiring Shows Gains

The Labor Department said on Thursday that the less volatile four-week average increased 6,000, to 351,750.

The weekly applications data can be volatile in July because some automakers briefly close their factories to prepare for new models and many schools close. Those factors can create a temporary spike in layoffs.

The broader trend has been favorable. Applications have declined steadily in the last year, as companies have laid off fewer workers and stepped up hiring. In the last six months, employers have added an average of 202,000 jobs a month. That is up from an average of 180,000 in the previous six months.

Yelena Shulyatyeva, an economist at BNP Paribas, said the volatility would most likely continue for the rest of the month and “could mask the true underlying trend in jobless claims data.”

“We believe that labor market conditions remain on a gradually improving trajectory,” she added.

Employers added 195,000 jobs in June, and revisions showed that an additional 70,000 jobs were added in the previous two months. The unemployment rate was 7.6 percent, down from 8.2 percent a year earlier.

Applications fell in the April-June quarter to their lowest level since the recession began, according to calculations by Joseph LaVorgna, chief United States economist at Deutsche Bank. They averaged 346,000 a week in the second quarter. That is the lowest quarterly average since the final three months of 2007, when the recession began; it was then 338,000.

About 4.5 million people received unemployment benefits in the week ending June 22, the latest data available. That is about 50,000 fewer than the previous week and a reduction of 23 percent from a year ago, when there were nearly 5.9 million recipients. Some of those who no longer receive benefits have gotten jobs, but many have simply used up all the benefits available.

Another economic report released on Thursday found that export prices fell by 0.1 percent, matching the expectation in a Reuters poll. Import prices slipped 0.2 percent last month compared with expectations calling for unchanged import prices, signaling global economic growth may be cooling.

Article source: http://www.nytimes.com/2013/07/12/business/economy/new-jobless-claims-rise-but-hiring-shows-gains.html?partner=rss&emc=rss

Employment and Retail Sales Record Recent Gains

The number of Americans seeking unemployment benefits dropped 12,000 last week to a seasonally adjusted 334,000, a decline that suggests steady job gains will endure.

The less volatile four-week average decreased 7,250 to 345,250, the Labor Department said on Thursday. Both figures are roughly 7,000 higher than a month ago, which were the lowest in five years.

Applications, a proxy for layoffs, have fallen 6.5 percent since January, suggesting that employers were cutting fewer jobs.

At the same time, hiring has been steady. Employers added 175,000 jobs in May, the department said last week. That nearly matched the monthly average for the previous year. The unemployment rate rose to 7.6 percent because more Americans were confident they could find work and began searching for a job.

Separately, the Commerce Department said that retail sales increased 0.6 percent last month, showing that consumers remained resilient despite higher taxes and could drive faster growth later this year.

“The retail sales result is a plus, no question,” said Jennifer Lee, an economist at BMO Capital Markets. “And the improving trend in jobless claims is supportive for future spending.”

About 4.5 million people received unemployment benefits in the week that ended May 25, the latest data available. That is 130,000 fewer than the previous week. The number of people receiving benefits fell 29 percent in the last year. Some of those recipients probably found jobs, but many probably used all the benefits available to them.

The economy grew at a solid annual rate of 2.4 percent in the first three months of the year. Consumer spending rose at the fastest pace in more than two years.

The Commerce Department also reported that businesses increased their stockpiles in April but their sales fell for a second straight month, constrained by a decline in orders to American factories.

Stockpiles rose 0.3 percent in April from March, after a decline of 0.1 percent in March from February.

Sales slipped 0.1 percent in April, after a sharp 1.2 percent drop in March. The figures represent the first back-to-back sales declines in nearly a year, although the weakness was concentrated in manufacturing.

More restocking bolsters economic growth because it means companies are ordering more manufactured goods. In April, retailers increased restocking 0.4 percent to lead all categories. Manufacturing and wholesale stockpiles grew 0.2 percent.

Article source: http://www.nytimes.com/2013/06/14/business/economy/employment-and-retail-sales-improved-in-may.html?partner=rss&emc=rss

Jobless Claims Decline, While Home Sales Rise

The number of Americans applying for unemployment benefits fell 23,000 last week to a seasonally adjusted 340,000, a level consistent with firm job growth.

And sales of new homes rose in April to the second-highest level since summer 2008, while the median price for a new home hit a high.

The Labor Department said on Thursday that the less volatile four-week average of jobless claims declined just 500 to 339,500. That is close to the five-year low of 338,000 reached in the first week of May. The four-week average is 9 percent lower than last November.

“The underlying story in jobless claims continues to be one of gradual improvement,” Bricklin Dwyer, an economist at BNP Paribas, wrote in a research report.

Unemployment claims are a proxy for layoffs. The decline in claims has coincided with steady job growth over the last six months. Since last November, employers have added an average 208,000 jobs a month. That is up from just 138,000 jobs a month in the previous six months.

Still, much of the improvement has come from fewer layoffs, not robust hiring. Employers laid off just 1.7 million workers in March, only slightly above the 12-year low reached in January. Overall hiring remains far below levels before the recession.

More than 4.7 million Americans were receiving unemployment benefits the week that ended May 4, down 23 percent from nearly 6.2 million a year earlier.

The United States still has 2.6 million fewer jobs than when the recession began in December 2007. The unemployment rate has fallen to a four-year low of 7.5 percent, from 10 percent in October 2009. Some of the decline is a result of many people giving up looking for work. The government counts people as unemployed only if they are searching for a job.

The Commerce Department said Thursday that sales of new homes rose to a seasonally adjusted annual rate of 454,000 in April. That was up 2.3 percent from March and slightly below 458,000 in January.

January and April had the fastest sales since July 2008.

The median price of a home sold in April was $271,600, the highest level on government records dating from 1993. The April price was 8.3 percent higher than in March and 13.1 percent higher than a year earlier.

Steady job creation and mortgage rates near record lows are encouraging more Americans to buy homes.

With the April increase, sales are now 29 percent higher than a year ago, but they are still below the 700,000 economists consider healthy.

The strength in April was led by a 10.8 percent increase in sales in the West. Sales in the South were up 3 percent, but sales fell 16.7 percent in the Northeast and 4.8 percent in the Midwest.

Sales of previously owned homes rose in April to a seasonally adjusted annual rate of 4.97 million, the highest level in three and a half years.

Greater demand, along with fewer homes for sale, is also increasing prices in most markets and encouraging more construction.

Applications for permits to build homes rose in April to the highest level in nearly five years. While construction of new homes and apartments slipped a bit in April, the decline occurred a month after construction topped one million for the first time since June 2008.

Article source: http://www.nytimes.com/2013/05/24/business/economy/jobless-claims-decline-while-home-sales-rise.html?partner=rss&emc=rss

Wall Street Edges Higher

Shares on Wall Street were mostly flat in afternoon trading on Friday, putting indexes on track to post another strong week after repeatedly reaching new highs.

The length of the recent rally has surprised many, and the upward momentum may be difficult to sustain without further trading catalysts like first-quarter earnings reports, which are nearing an end. The Standard Poor’s 500-stock index ended a five-day streak of record closing highs on Thursday, while the Dow Industrial average broke a two-day streak by dipping modestly.

Still, investors expect shares to generally trend higher, given the Federal Reserve’s accommodative monetary environment and encouraging data on the labor market, including jobless claims on Thursday and last week’s payroll report.

“Between the jobs report, quantitative easing and a zero percent interest rate policy,” said Chris Bertelsen, chief investment officer of Global Financial Private Capital in Sarasota, Fla., “there’s no question that there’s a floor under the market and that it wants to go up, even if some sectors are overdone.”

Shares fluctuated on Friday, and by early afternoon, the S.P. 500 was 0.2 percentflat, while the Dow Jones industrial average was down about 0.2 percent and the Nasdaq was up 0.3 percent. All three of the indexes have gained this week.

“We’re seeing a real rotation out of defensive names and into groups like technology and industrials,” said Mr. Bertelsen, who helps oversee $2 billion in assets. “That’s keeping the market moving and preventing it from plateauing.”

Priceline.com reported first-quarter earnings late Thursday that beat expectations, though its second-quarter outlook disappointed. Shares moved 3.5 percent higher on Friday.

Gap, the clothing retailer, rose 5 percent after reporting strong results.

With 89 percent of the S.P. 500 having reported, 66.7 percent have beat profit expectations, above the average since 1994 of 63 percent. However, only 46.4 percent of companies have beaten revenue expectations, well under the average since 2002 of 62 percent.

Carl Icahn, the activist investor, and Southeastern Asset Management proposed an alternative to a $24.4 billion buyout deal for Dell that involved giving shareholders an option to receive either $12 a share in cash or $12 in additional shares valued at $1.65 each. Shares of Dell rose 0.5 percent on Friday.

Article source: http://www.nytimes.com/2013/05/11/business/daily-stock-market-activity.html?partner=rss&emc=rss

Jobless Data and Rate Cut Propel Wall Street

Stocks rose on Thursday on strong job market data and hopes the first rate cut by the European Central Bank in 10 months would help shore up the euro zone economy.

By the end of trading the Standard Poor’s 500-stock index gained 0.9 percent, the Dow Jones industrial average was 0.9 percent higher, and the Nasdaq composite rose about 1.3 percent.

Data showed the number of Americans filing new claims for jobless benefits fell sharply last week to a five-year low. That followed a recent string of underwhelming data, including a slow rate of growth in factory activity in the United States and China.

In an effort to bolster the recession-hit euro zone economy, the European Central Bank cut interest rates for the first time in 10 months and held out the possibility of further policy action.

The central bank’s move followed Wednesday’s Federal Reserve statement that it would continue its bond buying scheme to keep interest rates low and spur growth, and added it would step up purchases if needed.

Earnings reports helped marginally, with Visa, up nearly 5.7 percent, as one of the highlights.

Market participants shifted focus this week to macroeconomic news as some of the biggest American companies have already reported earnings, according to Art Hogan, managing director at Lazard Capital Markets in New York.

“Three-fourths of the macro concerns this week have been positive. Factory activity was not anything to write home about, but the Fed, the E.C.B. and now jobless claims were good,” he said. “With a macro focus, the market seems to not be finding any resistance.”

General Motors rose 3.3 percent after reporting a stronger-than-expected quarterly profit as its North American business improved and its loss in Europe was smaller than Wall Street estimated.

Shares of Facebook Inc rose 5.6 percent after the social network said late Wednesday its mobile advertising revenue growth gained momentum in the first three months.

Other data showed the United States trade deficit fell more than expected in March as imports recorded their biggest drop since 2009, the latest sign of slowing domestic demand.

Article source: http://www.nytimes.com/2013/05/03/business/daily-stock-market-activity.html?partner=rss&emc=rss

Drop in Jobless Claims Counteracts March Data

Initial claims for state unemployment benefits dropped 42,000 to a seasonally adjusted 346,000, the Labor Department said on Thursday, unwinding a jump in the previous week that appeared related to difficulties adjusting the data for seasonal variations.

It was the largest weekly drop since mid-November. Economists, who had expected first-time applications for jobless aid to fall only to 365,000, said the decline suggested that the sharp slowdown in employment growth in March had been an aberration.

“We will see more job creation this month than we did in March, and today’s jobless claims numbers are consistent with that expectation,” said Robert A. Dye, chief economist at Comerica.

Employers added only 88,000 workers to payrolls in March — the smallest number in nine months — after a solid 268,000 increase in February.

Economists said the jobless claims data suggested that the slowdown in job creation reflected seasonal hiring being brought forward rather than underlying weakness in the labor market.

“All the March employment report provided a hint of is that jobs that normally would have got hired in March, some of them got hired earlier in February,” said Michael H. Strauss, chief economist at Commonfund.

Jobless claims are now back at the lower end of their range for this year, suggesting the labor market recovery remains on track.

The four-week moving average for new jobless claims, a better measure of labor market trends, increased 3,000 to 358,000. It remains close to a level economists normally associate with payroll gains of about 150,000 a month.

A second report from the Labor Department showed little sign of inflation. Import prices slipped 0.5 percent last month after rising 0.6 percent in February.

In the 12 months to March, import prices dropped 2.7 percent. Prices last month were subdued by a drop in the cost of petroleum and a strong dollar.

Article source: http://www.nytimes.com/2013/04/12/business/economy/drop-in-jobless-claims-counteracts-march-data.html?partner=rss&emc=rss

New Jobless Benefit Applications Fall to 5-Year Low

The Labor Department said Thursday that weekly unemployment benefit applications dropped 5,000 to a seasonally adjusted 330,000. That is the fewest since January 2008.

The four-week average of jobless claims, a less volatile measure, fell to 351,750. That is also the lowest in nearly five years.

The decline may reflect the government’s difficulty adjusting its numbers to account for layoffs after the holiday shopping season. Layoffs spike in the second week of January and then plummet. The department seeks to adjust for those seasonal trends, but the figures can still be volatile.

If the trend holds up, fewer applications would suggest that the job market is improving.

“Encouraging news on the U.S. jobs front, even when you remove all of the noise,” said Jennifer Lee, an economist at BMO Capital Markets. “Weekly data are noisy, particularly at this time of year, so keep that in mind.”

Applications are a proxy for layoffs. They have fluctuated between 360,000 and 390,000 for most of last year. At the same time, employers added an average of 153,000 jobs a month. That has just been enough to slowly push down the unemployment rate, which fell 0.7 percentage points last year to 7.8 percent in December. The government will issue its January employment report at the end of next week.

The number of people continuing to claim jobless benefits is also falling. Nearly 5.7 million people were receiving unemployment aid in the week ended Jan. 5, the latest data available. That is down from almost 5.9 million in the previous week.

Separately, a measure of the American economy intended to signal future activity increased in December from November, suggesting growth might strengthen in early 2013.

The Conference Board said on Thursday that its index of leading indicators rose 0.5 percent in December, the best showing since September. In November, the index was unchanged.

The gauge is meant to forecast economic conditions three to six months out.

A decline in applications for unemployment benefits, stock market gains on Wall Street and increases in applications for building permits drove the index higher in December.

Kenneth Goldstein, a Conference Board economist, said the rebound in the leading indicators suggested an improving outlook, in contrast to a few months ago when the expectations were not so optimistic.

“Housing, which has long been a drag, has turned into a positive for growth, and will help improve consumer balance sheets and strengthen consumption,” Mr. Goldstein said. “However, for growth to gain more traction we also need to see better performance on new orders and an acceleration in capital spending.”

Article source: http://www.nytimes.com/2013/01/25/business/economy/us-jobless-claims-reach-lowest-mark-in-five-years.html?partner=rss&emc=rss

Washington Deadlock Hurts Consumer Confidence

Consumer confidence in the first half of December took a sharper-than-expected dip, falling to its lowest level since August, according to a new survey released Thursday by the Conference Board. Wall Street also registered its frustration with the stalemate in Washington on Thursday, sending stocks sharply lower before recovering late in the day.

The gloom comes despite signs the economy has been holding up recently during the rising worries — other data released Thursday showed a healthy gain in new-home sales and a slight drop in new jobless claims. Indeed, the Conference Board’s data show consumer anxiety is centered on the outlook ahead for the economy, rather than on current conditions.

“People are realizing that we may not get a compromise and they’re getting nervous,” said Guy Berger, United States economist with RBS Securities. “It’s a precarious situation. So far consumers are worried about the future. Once they start worrying about the present, we’re in trouble.”

If Congress and President Obama cannot agree on a deal to cut the deficit by Jan. 1, more than $500 billion in tax increases and spending cuts are set to take effect.

Taxes have been the main sticking point — while the president favors eliminating Bush-era tax cuts on incomes over $250,000 and preserving current rates for lower incomes, many Republicans have been wary of supporting any tax increase. Republicans have been pushing for deeper spending cuts, something many Democrats have resisted.

Both sides remained dug in, and at midday Thursday Senator Harry Reid of Nevada, the Democratic majority leader, said he thought it was unlikely a compromise would be reached before Jan. 1.

With Wall Street tracking every turn of negotiations in Washington, shares tumbled after Mr. Reid’s remarks but recovered later in the day after reports the House would reconvene Sunday and take up the issue. The Standard Poor’s 500-stock index fell 1.73 points, to 1,418.10, while the Dow Jones industrial average sank 18.28 points, to 13,096.31

While an eventual deal that blunts part of the effect is expected in the coming weeks, some fallout from missing the Tuesday deadline will be felt right away — including a two percentage point increase in payroll taxes as well as the end of unemployment benefits for more than two million Americans. All that has increased the uncertainty for individuals, who until recently had shrugged off the fiscal standoff in Washington.

“Expectations have certainly shifted and it seems like consumer attitudes have caught up with business confidence,” said Michael Griffin, executive director at Corporate Executive Board, a member-based advisory firm. Surveys by the group have shown business sentiment weakening for three consecutive quarters, he said.

Consumers have had reasons to be more optimistic lately. After a deep decline caused by the housing bubble, home prices have begun to recover in many parts of the country. And the job market has been showing signs of improvement, with unemployment hitting a four-year low of 7.7 percent in November.

On Thursday, the Labor Department reported that initial claims last week for state unemployment benefits fell by 12,000, to a seasonally adjusted level of 350,000. Figures for jobless claims have been volatile since Hurricane Sandy, but the four-week moving average for new unemployment claims now stands at its lowest point in nearly five years. Sales of new single-family homes in November rose 4.4 percent, to a seasonally adjusted annual rate of 377,000, according to the Commerce Department.

By contrast, the Conference Board’s consumer confidence index fell to 65.1 in December from 71.5 in November. That was much sharper than the 1.5 point drop economists had been expecting. The board’s expectations index was off more sharply, sinking to 66.5 from 80.9 in November.

Several economists said the current situation recalls the standoff over raising the federal debt ceiling in the summer of 2011. In that case, too, consumer confidence eroded as both sides in Washington refused to blink until the last moment, but experts added the consequences were likely to be longer-lasting this time because the changes in tax policy affect individuals directly.

“In a lot of ways, this is a replay of the summer of 2011,” Mr. Berger said. “But it’s more serious this time.”

The longer the stalemate continues, the deeper the damage, economists said.

“It takes a while for consumer confidence to go up but it takes just a short while for consumer confidence to go down,” said Chris G. Christopher Jr., senior principal economist at IHS Global Insight. “The fiscal cliff has put a damper on things, and retailers are going to feel it in December.”

“As we get closer to Jan. 1, and the political rhetoric gets ramped up, people get worried,” he said.

Article source: http://www.nytimes.com/2012/12/28/business/economy/weekly-jobless-claims-fall.html?partner=rss&emc=rss

Stocks and Bonds: Shares Rise for a 3rd Day on Bank Earnings

Stocks rose for the third straight day Thursday, helped by results from Bank of America and Morgan Stanley and a report showing that the latest jobless claims dropped to a near four-year low.

The Standard Poor’s 500-stock index hit a five-month high, with the industrials, consumer discretionary stocks and financials leading gains.

Tech shares advanced, with earnings from a number of bellwether companies expected after the close. But those reports were mixed. Google fell short of Wall Street’s expectations, and its shares dropped 10 percent in after-hours trading.

“Google was the big disappointment because so much of their emphasis is developing products, specifically Android, where more dollars are going out than they anticipated,” said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.

In the regular session, Bank of America climbed 2.4 percent to $6.96 after it reported a fourth-quarter profit from a loss a year earlier. Morgan Stanley reported a loss that was narrower than expected, prompting a 5.4 percent jump in its stock to $18.28.

Financial stocks “have pretty much bottomed here in the U.S.,” said Paul J. Simon, chief investment officer at Tactical Allocation Group in Birmingham, Mich.

“They represent some compelling value. We think a lot of the bad news has been discounted, and you’ve seen stock prices rallying in the beginning of the year,” said Mr. Simon, whose firm has been buying financials.

Financial shares have rallied this year. The S. P. financial index is up 8.1 percent for 2012, helping to push the S. P. 500 up 4.5 percent for the year.

In the latest snapshot of the economy, data showed the number of Americans filing for new jobless benefits dropped last week to the fewest since April 2008. It added to views that the economy is slowly advancing.

“The broad-brush impression from the data is that it’s a Goldilocks setup — inflation tame, but economic growth showing signs of accelerating,” said Greg Anderson, senior currency strategist at Citigroup in New York.

The Dow Jones industrial average rose 45.03 points, or 0.36 percent, to end at 12,623.98. The Standard Poor’s 500-stock index gained 6.46 points, or 0.49 percent, to 1,314.50. The Nasdaq composite index climbed 18.62 points, or 0.67 percent, to close at 2,788.33.

The Treasury’s 10-year note fell 24/32, to 100 5/32. The yield rose to 1.98 percent, from 1.90 percent late Wednesday.

American Express also posted results after the close, and its shares slid 1.9 percent in extended trading to $49.98.

In a sign of optimism about Europe, Spain and France drew strong demand at government debt auctions.

The FTSEurofirst 300 index of top European shares closed up 1.1 percent at 1,046.30, near five-and-a-half-month highs. World stocks, as measured by the MSCI All World index, rose 0.9 percent to hit two-and-a-half-month highs.

Article source: http://feeds.nytimes.com/click.phdo?i=281e4df6ca780f3c206309ede7c0ce96