March 29, 2024

U.S. Jobless Claims Fall Sharply

The number of people seeking unemployment benefits for the first time plummeted last week to 352,000, the fewest since April 2008, the Labor Department said Thursday. The decline added to evidence that the job market is strengthening.

Weekly applications fell by 50,000, the biggest drop in the seasonally adjusted figure in more than six years. The four-week average, which smooths out fluctuations, dropped to 379,000. That was the second-lowest such figure in more than three years.

When weekly applications fall consistently below 375,000, it usually signals that hiring is strong enough to push down the unemployment rate. A department spokesman cautioned, however, that volatility at this time of year is common.

Separately, the department said consumer prices were unchanged last month, the latest sign that inflation remains tame. Lower gasoline prices offset rising costs for food, medical care and housing.

The Consumer Price Index was flat in December for the second straight month, the government said. Excluding volatile food and energy costs, so-called core prices rose 0.1 percent.

Inflation appears to be peaking after rising steeply last year. Prices rose 3 percent in 2011, up from a 1.5 percent pace in 2010 and the most since 2007. But that was down from the 12-month increase of 3.9 percent in September.

Lower inflation gives consumers more spending power, which bolsters growth. It also gives the Federal Reserve more leeway to keep interest rates low and take other steps to strengthen the economy.

Many economists say inflation has peaked and that they expect the rate to decline this year. The prices for oil and many farm commodities, such as corn and wheat, have declined. That has brought down the price of gasoline and slowed food inflation.

The Federal Reserve projects consumer price inflation will fall from about 2.8 percent in 2011 to roughly 1.7 percent this year.

In another economic report Thursday, the Commerce Department said builders ended 2011 with a third consecutive year of dismal numbers of new homes started and the worst on record for single-family home building.

In December, builders broke ground at a seasonally adjusted annual rate of 657,000 homes, the Commerce Department said. A third consecutive monthly increase in single-family home building was offset by a drop in volatile apartment construction.

For the entire year, builders began work on 606,900 homes. That was slightly better than in the previous two years. But it was only about half the number that economists equate with healthy markets.

Construction began on 428,600 single-family homes in 2011. It was the fewest on records dating back a half-century. Single-family homes are key to a housing rebound because they account for roughly 70 percent of the market.

Article source: http://feeds.nytimes.com/click.phdo?i=51778f16308cdf1576a1c5249d7e2b6b

U.S. Stocks Return to Pre-Downgrade Level

A slew of mergers and acquisitions helped build a rally of more than 2 percent in the Standard Poor’s 500-stock index, leading some analysts to weigh whether it could signal a possible period of stability after last week’s steep losses and volatility.

Standard Poor’s downgraded the nation’s credit rating on Aug. 5, after the market had closed at 1,199.38. Stocks sold off the next week, with the S.P. 500 and the Dow Jones industrial average finishing the five-day period nearly 2 percent lower. On Monday, however, the broader market as measured by the S.P. 500 inched above the pre-downgrade level to close at 1,204.49, after gaining 25.68 points, or 2.2 percent.

The Dow was up 213.88 points, or 1.9 percent, at 11,482.90, also exceeding its pre-downgrade close of 11,444.61. The same was the case with the Nasdaq composite index, up 47.22 points, or 1.9 percent, at 2,555.20.

With gains of more than 3 percent in utility, energy and bank stocks on Monday, analysts were cautiously weighing whether the worst of the recent upheaval could now be over.

“For now it is clear that in essence there is a relief in the market,” said Quincy Krosby, a market strategist for Prudential Financial. “You can feel it.”

Still, given the unease that had set in even before the downgrade, stocks are still in a slump. The S.P. 500 is more than 10 percent below where it was as recently as July 22.

And even as shares climbed on Monday, Ms. Krosby and other analysts noted said there was plenty of new economic data in the week ahead that could upend the gains of the last three sessions, including jobless claims and the Consumer Price Index. In addition, Monday’s volumes were low.

“When the buying picks up, we like to see more buying,” she said. “It is an indication of more conviction.”

New deals helped propel Monday’s market. A multibillion-dollar Google deal, a rise in commodity prices and the perception that European leaders and the central bank would take measures including bond purchases to support heavily indebted member countries could be helping, analysts said, though such sovereign debt and economic problems are expected to remain a factor in the markets.

Financial stocks rose, including Bank of America, which was up 7.9 percent to $7.76. It took steps on Monday to exit the international credit card business, agreeing to sell its $8.6 billion Canadian card venture to the TD Bank Group for an undisclosed amount and putting its remaining European card portfolio on the block.

Citigroup was up 4.8 percent to $31.27.

Worries about the United States economy and the threat of a financial crisis in Europe have overwhelmed traders, but the downgrade proved to be a tipping point, sending stocks reeling in what turned out to be one of the most tumultuous weeks ever on Wall Street.

Analysts said that investors were taking a second look at some of the causes of the volatility from last week.

Investors’ attention was focused on a meeting Tuesday of Chancellor Angela Merkel of Germany and President Nicolas Sarkozy of France. The two leaders will be addressing the threat to the euro zone posed by low growth and teetering public finances in some euro members, their room to maneuver circumscribed by fears that France could be next in line for market attacks.

“People are taking a more rational view of the path ahead, that some of the problems in Europe can be addressed with additional spending restraint from some of the governments,” which will take time, said Russell Price, senior economist with Ameriprise Financial.

The euro rose against the dollar, a development that Ms. Krosby attributed to expectations for the Merkel-Sarkozy meeting.

The price of the benchmark 10-year Treasury note fell 14/32 to 98 12/32, and the yield rose to 2.31 percent, from 2.26 percent late Friday.

“Today was a day that people took a little bit of a rest to try to digest all the news that has happened and the volatility that has happened in the market recently,” said George Rusnak, national director of fixed income for Wells Fargo.

Broader commodity prices were up, and investors were probably doing some bargain hunting after last week’s declines, said Keith B. Hembre, the chief economist and chief investment strategist at Nuveen Asset Management.

“It is part of the market trying to find its feet,” he said. “Despite the bounce on Friday, this market has been really beaten up.”

European stocks showed modest gains. The FTSE 100 index in London was up 0.6 percent. The CAC 40 in France rose 0.8 percent and the DAX in Germany was up 0.4 percent. Asian shares rose, with the Tokyo benchmark Nikkei 225 stock average gaining 1.4 percent.

Ben Protess, David Jolly and Bettina Wassener contributed reporting.

Article source: http://feeds.nytimes.com/click.phdo?i=431835457d49853847cff33f1769cb55

Bucks Blog: Friday Reading: Are Tanning Beds Addictive?

August 12

Friday Reading: Are Tanning Beds Addictive?

Tanning beds may be addictive, there’s no lobster in Zabar’s lobster salad, jobless claims decline and other consumer-focused news from The New York Times.

Article source: http://feeds.nytimes.com/click.phdo?i=25a3b7c3b79f51e17c46c87ed1c1cc2f

Jobless Claims Decline to 4-Month Low

Initial claims for state unemployment benefits fell 7,000 to a seasonally adjusted 395,000, the Labor Department said, the lowest level since early April. Economists had expected a reading of 400,000.

“We are not necessarily on the verge of another dip in economic activity,” said Millan Mulraine, a senior macro strategist at TD Securities in New York.

“The level of claims at this point is more consistent with at least no deterioration in labor market conditions and at best an economy that is adding jobs at about 200,000” a month, Mr. Mulraine said.

But the optimism generated by the claims report was damped somewhat by a jump in the trade deficit to $53.1 billion in June, the largest since October 2008, from $50.8 billion in May.

As a result of the wider trade shortfall, economists estimated the government could lower the second-quarter’s already weak annual growth rate of 1.3 percent to 0.9 percent.

The government will release its second estimate for second-quarter gross domestic product on Aug. 26. The economy grew at a 0.4 percent rate in the first quarter.

The Federal Reserve said on Tuesday that economic growth was considerably weaker than expected and unemployment would fall only gradually.

Hiring accelerated in July after abruptly slowing in the previous two months. However, there are worries that a sharp sell-off in stocks and the fight between Democrats and Republicans over the government’s debt ceiling could curtail employers’ enthusiasm to hire new workers.

“The key point here is that a clear downward trend in claims has emerged in recent weeks, even as the debt ceiling chaos reached its peak,” said Ian Shepherdson, chief United States economist at High Frequency Economics in Valhalla, N.Y.

“We still need to see how the drop in stocks might feed back into claims, but with consumers’ spending accelerating in recent weeks, why would firms fire more people?”

An increase in the volume of oil imports pushed the monthly oil import bill in June to its highest since August 2008. That and the second consecutive month of declines in exports contributed to the wider trade deficit in June, the government reported.

Imports from China also rose nearly 5 percent to $34.4 billion, lifting the closely watched trade gap with that country to $26.7 billion, the highest in 10 months.

United States exports fell for a second consecutive month to $170.9 billion, as shipments to Canada, Mexico, Brazil, Japan, France, China and Central America all declined.

“The sharp drop in exports is a major concern for the economic outlook as it is an indication that the pace of global activity may be slowing appreciably,” Mr. Mulraine at TD Securities said.

Data on Wednesday showed China’s exports hit a record high in July as shipments to Europe and the United States proved surprisingly buoyant. July exports rose 20.4 percent from a year ago, the strongest gain since April.

Article source: http://feeds.nytimes.com/click.phdo?i=bd92881723fd4b08d46862b2dae05596

Filings for Jobless Claims Fell by 10,000 Last Week

The Labor Department said on Thursday that the number of people seeking benefits dropped 10,000 to 382,000 in the week that ended on Saturday. That was the third drop in four weeks. The four-week average of applications, a less volatile measure, declined to 389,500.

The average is just 1,000 above a two-year low that was reached three weeks ago.

Applications near 375,000 are consistent with a sustained increase in hiring. They peaked during the recession at 659,000.

The number of people seeking benefits has fallen for several months. The four-week average has dropped by 28,750, or nearly 7 percent, in the last eight weeks. At the same time, businesses are stepping up hiring.

Still, the number of applications could move higher in the coming weeks. Toyota Motor has said that it may temporarily shut down its North American plants this month because of a shortage of parts from Japan, where the earthquake and tsunami have disrupted production. Other auto companies may also suspend production, which could cause temporary layoffs and a spike in applications for unemployment benefits.

In another report, the Federal Reserve said consumers borrowed more money in February to buy new cars but cut back on other purchases on credit.

Borrowing increased by $7.6 billion, or 3.8 percent, in February, the Fed said. It was the fifth consecutive monthly gain.

All of the strength came in the category that includes car loans. That increased 7.7 percent. Borrowing in the category that covers credit cards fell 4.1 percent. That category has risen only once in the more than two years since the 2008 financial crisis peaked.

The gains in total credit pushed borrowing up to a seasonally adjusted annual rate of $2.42 trillion in February.

Article source: http://feeds.nytimes.com/click.phdo?i=cab270e20466f8d98a75ff6688165ffb