June 24, 2024

Awaiting Word From Fed, Markets Slip

Stocks were lower on Wednesday as investors weighed the minutes from the Federal Reserve’s July policy-setting meeting.

In afternoon trading, the Standard Poor’s 500-stock index was 0.4 percent lower, the Dow Jones industrial average was 0.5 percent lower and the Nasdaq composite fell by 0.3 percent.

The minutes showed that Federal Reserve policy makers were considering tapering off their huge economic stimulus efforts, according to the official summary, but they did not yet have a clear consensus about the timing of their actions.

The S. P. 500 rose on Tuesday to end a four-day losing streak, but remained under technical pressure as it closed below its 50-day moving average for a third consecutive session. It closed roughly five points below that level, now at 1,657.65 points, which is becoming technical resistance.

Retailers led gains in the Tuesday session and will continue to be in focus in early trading as results from companies including Lowe’s and Target take center stage.

Investors have been grappling over the last several weeks with uncertainty over when the Fed will begin to wind down its $85 billion-a-month stimulus program.

Shares of Toll Brothers, the home-building company, gained 0.5 percent after it reported a jump in revenue as the recovery in the American housing market gathered pace.

Target warned that its annual profit might be near the low end of its forecast as consumer spending remained cautious; its shares fell 3.9 percent.

Shares of the home improvement chain Lowe’s rose 5.1 percent after it reported a bigger-than-expected rise in profit and revenue as the housing market’s recovery encouraged people to spend more on their homes.

Staples reported weaker-than-expected quarterly results on dismal sales in international markets and cut its outlook for the year. Its shares slumped 13.5 percent.

In Japan, the Nikkei ended 0.2 percent higher as investors drew support from a declaration by the Bank of Japan’s governor, Haruhiko Kuroda, that he would not hesitate to expand the bank’s huge asset-buying campaign if the economic outlook darkened.

Among the major currencies — where safe-haven flows ahead of the Fed minutes have favored the yen and Swiss franc — the dollar had recovered some lost ground, gaining 0.4 percent against a basket of currencies to move off a two-month low.

The euro eased 0.4 percent against the dollar, to $1.3367, having touched a six-month high of $1.3452 on Tuesday, and sterling briefly hit a two-month high of $1.5697 against the dollar when a business survey showed an improvement in British factory orders.

In the fixed income markets, benchmark 10-year Treasury yields edged back to 2.83 percent, though rates remained close to 2013 highs as many investor have already positioned for the potential Fed tapering.

Commodity markets were generally softer. Spot gold was down 0.4 percent, at around $1,368 an ounce.

Benchmark New York crude oil for October delivery lost 47 cents, to $104.64 a barrel.

The widely held conviction that the minutes of the Fed’s July meeting will hint at a policy shift next month hit the Indian rupee, Indonesian rupiah and Turkish lira, despite supportive words and actions from those countries’ central banks.

“I don’t think we’re going to get that clear signal as to whether September is when they pull the trigger on tapering, but that is what the markets are hoping for,” said Daragh Maher, foreign exchange strategist at HSBC.

Large current account deficits make all three countries particularly vulnerable to capital outflows at times of monetary tightening.

Emerging stock markets have shared in the sell-off, victims of a growing conviction among investors that an end to Fed bond buying because of the stronger American economic outlook makes developed countries’ debt and equity markets a sounder bet.

Article source: http://www.nytimes.com/2013/08/22/business/daily-stock-market-activity.html?partner=rss&emc=rss

U.S. Factory, Jobless Data Point to Firming Economy

The burst of strength in the economy as the third quarter started keeps on track expectations that the Federal Reserve will start reducing its monetary stimulus later this year.

“The future growth outlook remains on a highly positive trajectory, keeping the September tapering timeline firmly intact despite the Fed’s nod to below-target inflation,” said Gennadiy Goldberg, an economist at TD Securities in New York.

The Institute for Supply Management said on Thursday its index of national factory activity rose to 55.4 last month from 50.9 in June, buoyed by a surge in new orders and production.

A reading above 50 indicates expansion in the sector, which hit a soft patch in the spring.

The pick-up in manufacturing was also corroborated by financial data firm Markit, which said its U.S. Manufacturing Purchasing Managers Index rose to a four-month high in its final July reading.

Measures of factory jobs rose in both reports, with the ISM employment index reaching its highest since June last year.

The improvement in employment dovetailed with a separate report from the Labor Department showing initial claims for state unemployment benefits dropped 19,000 to a seasonally adjusted 326,000 last week, the lowest since January 2008.

While claims are usually volatile in July due to auto plant shutdowns, economists who had expected new filings to rise to 345,000 said the general tone of the report was consistent with a pick-up in job growth.

The four-week moving average for new claims, which irons out week-to-week volatility, fell 4,500 to 341,250.

“This suggests the labor market is still expanding. There is no sign that it’s slowing. It might actually be picking up a bit,” said David Sloan, senior economist at 4Cast in New York.

Automakers traditionally close assembly plants for retooling in July but they have now either shortened the shutdown period or forgone closures altogether, throwing off the model that the government uses to adjust the data for seasonal variations.

Stocks on Wall Street pushed higher, with the Standard Poor’s 500 index topping the 1,700 level for the first time. U.S. Treasury debt prices fell, while the dollar rallied against a basket of currencies.

GOOD START TO THIRD QUARTER

Last week’s claims data has no bearing on Friday’s employment report for July as it falls outside the survey period. The government is expected to report nonfarm payrolls increased 184,000 last month after rising 195,000 in June, according to a Reuters survey of economists.

The jobless rate is seen ticking down a tenth of a point to 7.5 percent. However, there is a risk payrolls could surprise on the upside after a report on Wednesday showed U.S. private employers maintained a high pace of hiring in July.

Overall job gains in the second quarter averaged 196,300 per month.

In another report, consultants Challenger, Gray Christmas said planned layoffs at U.S. firms fell 4.2 percent in July.

The factory data and steadily improving labor market conditions suggested the economy got off to a good start in the third quarter. Gross domestic product grew at a 1.7 percent annual rate in the second quarter, up from a pedestrian 1.1 percent pace in the first three months of the year.

New orders in the ISM survey touched their highest in two years and a drop in inventories suggested further strength in order books was in the cards.

“We have been arguing that manufacturing growth would strengthen in the second half of the year as the drag from Europe diminished and as capital spending picked up,” said John Ryding, chief economist at RDQ Economics in New York.

“This report is consistent with this view and, given the size of the gain in new orders and the drop in inventories, it suggests the faster growth rate will be maintained into August.”

Manufacturing could get a boost from robust demand for trucks, thanks to a strengthening housing market. General Motors Co, Ford Motor Co and Chrysler Group reported strong truck sales in July. However, low inventory of some popular car models slowed automobile sales.

While Federal Reserve policy-makers on Wednesday after a two-day meeting offered no indication they planned to reduce the U.S. central bank’s monthly $85 billion in bond purchases at their next meeting in September, economists said the silence on that issue was aimed at keeping market-set interest rates tamped down.

“For the Fed, it clearly wants to taper (bond purchases) reasonably soon. We are still on a path toward tapering,” said Pierre Ellis, senior global economist at Decision Economics in New York.

A sixth report, from the U.S. Commerce Department, showed an unexpected drop in construction spending in June. Economists were little concerned about the decline, however, noting that May and April’s construction outlays had been revised higher.

“Significant upward revisions to May and April left an overall positive picture for the second quarter, consistent with the solid growth in residential and structures investment seen in yesterday’s second-quarter GDP report,” said Peter Newland, a senior economist at Barclays in New York.

Construction spending dropped 0.6 percent to an annual rate of $884 billion, the Commerce Department said.

(Reporting by Lucia Mutikani Additional reporting by Leah Schnurr and Richard Leong in New York; Editing by Andrea Ricci and James Dalgleish)

Article source: http://www.nytimes.com/reuters/2013/08/01/business/01reuters-usa-economy.html?partner=rss&emc=rss

Jobless Claims Continue Decline

WASHINGTON — The number of Americans filing new claims for unemployment benefits unexpectedly fell week, the latest indication the labor market recovery was gaining traction.

Initial claims for state unemployment benefits dropped 10,000 to a seasonally adjusted 332,000, the Labor Department said on Thursday. That was the third straight week of declines. Economists polled by Reuters had expected first-time applications last week to rise to 350,000.

The previous week’s figure was revised to show 2,000 more applications than previously reported.

The four-week moving average for new claims, a better measure of labor market trends, fell 2,750 to 346,750, the lowest level in five years, suggesting a firming in underlying labor market conditions.

The report follows news last week that nonfarm payrolls increased 236,000 in February, with the unemployment rate falling to a four-year low of 7.7 percent.

The sustained pace of steady job gains is starting to push up wages, which should support domestic demand. Though layoffs have ebbed, sluggish domestic demand has made companies cautious about ramping up hiring.

A government report on Tuesday showed layoffs in January were the fewest since 2000. The signs of strength in the labor market could intensify the debate at the Federal Reserve on the future course of monetary policy.

The number of people still receiving benefits under regular state programs after an initial week of aid dropped 89,000 to 3.02 million in the week ended March 2. The so-called continuing claims were at their lowest level since June 2008.

Separately, the Labor Department said Thursday that producer prices in February rose by the most in five months, but there was little sign of a broader increase in inflation pressures.

The seasonally adjusted Producer Price Index increased 0.7 percent last month after advancing 0.2 percent in January, the government said. The rise in prices received by farms, factories and refineries was in line with economists’ expectations.

However, underlying inflation pressures remained contained, with wholesale prices excluding volatile food and energy costs rising 0.2 percent after a similar advance in January. The so-called core index had been expected to rise 0.2 percent last month.

Article source: http://www.nytimes.com/2013/03/15/business/economy/jobless-claims-continue-decline.html?partner=rss&emc=rss

Applications for Jobless Benefits Drop, Data Shows

Meanwhile, the index of leading economic indicators increased more than forecast in August, easing concern the economy was headed for recession.

The index showed that the outlook for the next three to six months climbed 0.3 percent after a 0.6 percent gain in July, according to the Conference Board, a New York-based research group that releases the report. Economists projected a 0.1 percent rise in August, according to the median forecast in a Bloomberg News survey.

Four of the 10 components of the leading index contributed to the increase in August. In addition to the money supply and building permits, they included slower supplier delivery times.

The rise in money supply could signal that investors might be losing confidence in the global economy and reducing their holdings of riskier assets.

A higher level of initial jobless claims raises the odds that American companies may put off plans to increase employment, making it difficult for joblessness to fall below 9 percent.

“These numbers are consistent with a job market that is essentially in suspended animation,” said Brian Jones, an economist at Société Générale in New York.

Estimates for first-time claims ranged from 408,000 to 430,000 in the Bloomberg survey of 45 economists. The Labor Department initially reported the previous week’s applications at 428,000.

The four-week moving average of initial jobless claims, a less-volatile measure, climbed to 421,000 from 420,500.

The number of people continuing to collect jobless benefits fell by 28,000 in the week ended Sept. 10 to 3.73 million. The continuing claims figure does not include the number of workers receiving extended benefits under federal programs.

Those who have used up their traditional benefits and are now collecting emergency and extended payments decreased by about 103,350 to 3.5 million in the week ended Sept. 3.

The unemployment rate among people eligible for benefits, which tends to track the jobless rate, held at 3 percent in the week ended Sept. 10, the Labor Department report showed.

Article source: http://feeds.nytimes.com/click.phdo?i=7fa0280ea644d92bf69a94b4b049459e

Economix: Older Workers Without Jobs Face Longest Time Out of Work

After reaching record highs month after month, the typical length of time a jobless worker in the United States has been unemployed finally fell in April, to “only” 38.3 weeks. But the outlook is looking bleaker for the nation’s older workers.

Sure, older workers are much less likely to be unemployed than their younger counterparts. Here’s a look at unemployment rates by age:

DESCRIPTIONSource: Bureau of Labor Statistics Note: The figures are presented as a 12-month moving average because not all age groups had seasonally-adjusted data available.

As you can see, the older you are, the less likely you are to be unemployed. The unemployment rate for people over age 65 is about 6.5 percent, taken on a 12-month moving average. The unemployment rate for teenagers is nearly four times that.

But if older workers do lose their jobs, their chances of finding another job are extraordinarily low. Here’s a look at the average duration of unemployment (on a 12-month moving average), broken down by age of the unemployed:

DESCRIPTIONSource: Bureau of Labor Statistics Note: The figures are presented as a 12-month moving average to adjust for seasonality.

The average jobless person over age 65 has been looking for work for 43.9 weeks. For someone between the ages of 55 and 64, the typical duration is 44.6 weeks, just a few weeks shy of a year. The average unemployment spells for both of these groups are at record highs.

The average teenager, on the other hand, has been looking for less than half that time, at 19.9 weeks.

Why are older workers more likely to be stuck in a seemingly eternal jobless limbo?

Some of it has to do with the fact that younger workers are more likely to drop out of the labor force entirely if they are unable to find a job after weeks of searching. Some young workers may go back to school, and some may move in with their parents. Wherever they end up, if they’ve dropped out of the labor force, they’re no longer technically counted as unemployed.

Additionally, older workers are more likely to have been laid off from industries in structural decline. Before the Great Recession, these industries — like manufacturing and newspapers — had probably been trying to shrink through attrition, meaning that they hired fewer young people to replace retiring workers, meaning offices and factories got gradually older. As the economy soured, these employers started resorting to more layoffs.

Now their former employees are structurally displaced, and probably less likely to go back to school for retraining or to move across the country where the job market may be better. After all, older workers are more likely to own their own homes, and so are less mobile.

Finally there is the possibility of age discrimination. Nearly every out-of-work American over the age of 45 I’ve spoken with has complained that prejudice is keeping him or her from getting a job.

Age discrimination is hard to prove, especially since employers are unlikely to inform applicants that age factored into the hiring decision. (Plus, as I’ve mentioned before, young people — and whites, blacks, Asians, Hispanics, women and men — also all seem to think that prejudice explains why they’re out of work.)

In any case these long durations of unemployment for older workers are particularly troubling, since the longer workers are out of the work the less employable they become. Lengthening spells of joblessness therefore do not bode well for the country’s ability to ever get displaced older workers back into gainful employment.

When we talk about the scarring effect of unemployment, we’re usually referring to the scars on young people’s careers. But there is also much to worry about the permanent damage that joblessness can wreak on older workers, many of whom feel they’re being summarily kicked out of the labor force.

Article source: http://feeds.nytimes.com/click.phdo?i=71c62ef0c3c400ba9d0dab668a663a82