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Drop in Jobless Claims Hints at Slow Recovery in Labor Market

February 7, 2013 by Leave a Comment

Other reports on Thursday showed many top retailers had strong sales in January even as customers were hit with higher taxes, while productivity at businesses slumped in the fourth quarter.

Initial claims for state unemployment benefits dropped by 5,000 to a seasonally adjusted 366,000, the Labor Department said. That was enough to pull down a four-week moving average of new claims, a gauge of the trend in layoffs, by 2,250 to 350,500, its lowest since March 2008.

“The labor market is improving, but certainly not at a robust rate by any means,” said Russell Price, an economist at Ameriprise Financial.

While employers have pulled back on layoffs, they have added jobs only at a lackluster pace. Economists say the tepid recovery of the labor market means the Federal Reserve is likely to keep buying bonds into next year to keep borrowing costs low.

In a sign of the difficulty many people have in finding a job, the number of people still receiving benefits under regular state programs after an initial week of aid increased 8,000, to 3.22 million, in the week ended Jan. 26.

The economy has shown signs of underlying strength despite a surprise contraction in the fourth quarter.

Consumer spending has been looking stronger, and many retailers reported robust sales. Over all, sales at stores open more than a year rose 5 percent in January for 20 retailers, according to Thomson Reuters, pointing to some resilience in spending despite the increase in payroll taxes that hit most Americans last month.

The Commerce Department’s more comprehensive report on January retail sales, due on Feb. 13, is expected to show that sales edged higher from December when adjusted for seasonal swings.

Consumers are borrowing rather readily, a sign of confidence in the recovery. Consumer credit increased by $14.59 billion in December, the Federal Reserve said in a report.

The gains were driven by the biggest increase in nonrevolving credit, which includes student and auto loans, since November 2001.

Separately, the Labor Department said worker productivity outside the farming sector fell in the fourth quarter by the most in nearly two years as output increased only marginally despite steady gains in employment.

Productivity declined at a 2 percent annual rate, the sharpest drop since the first quarter of 2011 and a larger fall than the 1.3 percent forecast by economists in a Reuters poll.

Productivity is expected to rebound in the current period because analysts believe weak output during the fourth quarter was partly a result of temporary factors, like an unusually sharp decline in government spending on the military.

The drop in productivity combined with a big increase in hourly compensation to drive unit labor costs up at a sharp 4.5 percent rate in the fourth quarter.

Hourly compensation, which includes wages as well as employer contributions to social insurance and private benefit plans like health care, rose at a 2.4 percent rate.

Article source: http://www.nytimes.com/2013/02/08/business/economy/drop-in-jobless-claims-hints-at-slow-recovery-in-labor-market.html?partner=rss&emc=rss

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Trade Deficit and Consumer Sentiment Rise

January 14, 2012 by Leave a Comment

A separate survey released on Friday showed that consumer sentiment hit an eight-month high in early January as Americans grew more optimistic about job prospects.

The Thomson Reuters/University of Michigan preliminary January reading on its overall index of consumer sentiment rose to 74 from 69.9 in December for the fifth month of gains and the highest level since May 2011.

The report topped expectations of 71.5 and contrasted with December’s weaker-than-expected retail sales reported on Thursday.

“This shows even though the retail sales number this week was disappointing, there could be a little more underlying strength,” said Kathy Lien, director of research at GFT Forex in Jersey City. “I’d be wary of looking at this as a shift in long-term confidence, but I’d look at this as good news today.”

Commerce Department data showed that the trade gap was $47.8 billion in November, exceeding analysts’ forecast of a $45 billion deficit.

“The trade balance deteriorated pretty significantly, and it could shave a few tenths of a percent off our expectation for fourth quarter,” said Russell Price, senior economist at Ameriprise Financial.

JPMorgan Chase said gross domestic product growth for the fourth quarter was now tracking closer to 3 percent than the company’s forecast of 3.5 percent.

A wider deficit shows that more goods and services bought by American businesses and consumers were produced outside the country, subtracting from gross domestic product.

“The external outlook does not bode well for U.S. exports, as a deceleration in global growth will coincide with a stronger U.S. dollar due to lingering financial concerns regarding Europe’s sovereign debt turbulences,” wrote Martin Schwerdtfeger, a senior economist at the TD Bank Group, in a note.

A dip in import prices showed that inflation pressures were still muted, giving the Federal Reserve wiggle room as it holds benchmark interest rates at ultralow levels.

Import prices were down 0.1 percent in December after a 0.8 percent gain in November as oil prices fell, in line with economists’ expectations.

Economic growth in the final quarter of 2011 is likely to have accelerated from the third quarter’s 1.8 percent rate, with many economists expecting an annualized rise of around 3 percent.

Consumer spending, once a crucial pillar of the economy, remains lackluster and sensitive to shocks.

Although some Federal Reserve officials have said further steps may be needed to stimulate the economy, no action is expected at the next Fed policy meeting at the end of the month.

Thirty-four percent of consumers polled in the confidence survey said they had heard of recent job gains, a record high in the survey’s history and well above the 21 percent recorded in December.

“The data suggest a stronger consumer spending outlook, rising to about a 2.1 percent gain in 2012,” Richard Curtin, the survey director, said in a statement.

But consumers still lacked confidence in government economic policies, with the majority rating them unfavorably for the sixth consecutive month.

Americans also remained dour on their personal finances, with just 24 percent expecting their finances to improve in January, compared with 25 percent last month.

The survey’s barometer of current economic conditions rose to the highest level since February at 82.6, from 79.6, while its gauge of consumer expectations rose to 68.4 from 63.6.

Article source: http://feeds.nytimes.com/click.phdo?i=4a9d6f31e77b3d33bb912ab4b5523a18

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Stocks Jump on Greek Debt Deal

October 27, 2011 by Leave a Comment

But some analysts said that while the deal helped to give the financial markets confidence, there remained questions about its implementation, and that fully fixing the problems of excessive debt and weak growth could take years.

Still, after days of anticipation, the markets put whatever uncertainties remained behind them, at least for the short term. Stocks were up as much as 6 percent in Europe, and Wall Street’s three main indexes jumped more than 2 percent at the opening, putting the broader market higher for the year to date. Asia also closed higher.

It was a marked turn-around from just a few weeks ago, when anxiety over the European debt crisis helped push the broader market in the United States to the brink of a bear market. On Oct. 3, the Standard Poor’s 500 index was down 19.4 percent from its high on April 29.

The latest news from Europe came early Thursday, when officials from the European Union and the International Monetary Fund reached a deal with bankers to write down the face value of their Greek debt by 50 percent, hoping to reduce the ratio of the country’s debt to gross domestic product to 120 percent by 2020. Economists believe that is essential if Greece is not to default on its loans.

Officials also agreed that European banks would need to raise more capital and said they would increase the euro zone bailout fund to $1.4 trillion, a move that they hope will provide the capacity necessary to keep Italy and Spain from following Greece’s painful path.

The measures are not complete, but after anxiety had run high before the meeting, investors greeted the signs of apparent success by bidding stocks higher.

“I think it is a very good step but I don’t think it is the complete package,” said Russell Price, the senior economist with Ameriprise Financial. “That is going to take years to make sure some of these heavily indebted countries are going to be able to bring down their debt.”

Mr. Price noted that the agreement sent a message to the financial markets that the European leaders were “willing to do whatever it takes” to solve the problem.

“I think that has given the markets confidence in the system and that is really what is propelling” trading, he added.

In late trading in Europe, the Euro Stoxx 50 index, a barometer of euro zone blue chips, rose 5.7 percent, while the FTSE 100 index in London gained 2.6 percent.

Financial shares led European indexes. BNP Paribas rose 15 percent, Société Générale rose 13 percent, Deutsche Bank rose 15 percent and H.S.B.C. Holdings rose 4.3 percent.

On Wall Street, the Standard Poor’s 500-stock index rose 2.4 percent, turning positive for the year to date. The Dow Jones industrial average and the Nasdaq composite index were both up about 2.1 percent.

The United States 10-year Treasury bond yield rose to 2.27 percent, from 2.21 percent on Wednesday.

Anthony Valeri, a fixed income investment strategist for LPL Financial, said that the European deal, to an extent, removed one of the lingering risks to the market and more specifically, to the banking system.

“But the devil is in the details,” he added. “There are some implementation risks going forward.”

He said there were questions about participation in increasing the bailout fund.

“We don’t know the participation from private investors or the emerging market countries, as the case may be,” he said.

Another negative was that banks must meet a new core capital ratio of 9 percent by the middle of 2012, he added. That could mean they could either raise capital or shed assets, which would be a negative for the market because of the pressure on prices.

In Asia, shares were stronger almost across the board. The Tokyo benchmark Nikkei 225 stock average rose 2 percent, the Sydney market index S.P./ASX 200 rose 2.5 percent, and Hong Kong’s Hang Seng index rose 3.3 percent.

“Bank recapitalization, haircuts and more firepower for the rescue funds are supposed to form a euro-style bazooka,” Carsten Brzeski, an economist with ING in Brussels, said in a research note. “Even if there are still loose ends and unsolved questions, yesterday’s summit was an important step in the right direction.”

Shortly after the deal was announced, United States crude oil futures for December delivery rose 2.8 percent to $92.71 a barrel. Comex gold futures slipped were mostly unchanged, at $1,723.40 an ounce.

The dollar was mixed against most other major currencies. The euro rose to $1.4140 from $1.3906 late Wednesday in New York, while the British pound rose to $1.6059 from $1.5975. But the dollar fell to 75.83 yen from 76.17 yen, and to 0.8640 Swiss franc from 0.8810 franc.

Bond market movements showed investors moving out of the securities considered the most secure and into riskier assets.

The Federal Reserve on Thursday is starting a bond buy-back measure that will bump up prices on long-term notes, Mr. Valeri said.

Bond prices for embattled euro zone governments rose sharply, while the yields fell. The yield on Greek 10-year bonds was 22.16 percent, down 1.17 percentage points. Spanish and Italian bond yields also fell.

David Jolly reported from Paris.

Article source: http://www.nytimes.com/2011/10/28/business/daily-stock-market-activity.html?partner=rss&emc=rss

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U.S. Stocks Open With Strong Gains

August 15, 2011 by Leave a Comment

Stocks in the United States swept higher on Monday with gains in the energy and financial sectors that appeared for now to give the market a bout of stability after last week’s volatility.

The rally followed a mostly quiet weekend after one of the most tumultuous weeks ever on Wall Street, in which worries about the United States economy and the threat of a financial crisis in Europe overwhelmed traders, sending the main American stock indexes down less than 2 percent.

The higher opening on Wall Street on Monday came after European and Asian markets rallied. 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 debt-strapped periphery countries could be helping, analysts said, though such sovereign debt and economic problems are expected to remain a factor in the markets.

Google’s announcement of a $12.5 billion deal to acquire Motorola Mobility Holdings, the cellphone unit spun off earlier this year by Motorola, helped raise the technology sector of the S. P. more than 1 percent. Motorola’s shares were up more than 57 percent within the first hour of trading, while Google’s shares slipped.

Energy shares rose more than 2 percent while financial stocks were up nearly 2 percent. As oil prices rose, shares in Exxon Mobil and Chevron were up more than 2 percent.

“The initial fears of Monday and Wednesday of last week were a little bit overdone,” said Russell Price, senior economist with Ameriprise Financial.

While worries about the United States economy have overshadowed the markets for weeks, Mr. Price and several other economists said that investors were taking a second look at some of the causes of the volatility from last week.

“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 Mr. Price.

And as for the United States, he added, “there is probably some easing of the anxiety that the double-dip recession is not a sure thing, although today’s Empire manufacturing report was disappointing.”

He was referring to the Empire State Manufacturing Survey, which economists consider when assessing the strength of one of the most important sectors in the economic recovery. The index, produced by the Federal Reserve Bank of New York, fell to a negative 7.72 points in August, after a negative 3.76 points in July, suggesting that business conditions worsened for manufacturers in the New York region.

Financial stocks were up solidly. Bank of America, the most active of the group, rose nearly 4 percent. 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 2.85 percent and Morgan Stanley rose more than 4 percent.

Broader commodity prices were up on Monday, 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,” said Mr. Hembre.

“Despite the bounce on Friday, this market has been really beaten up,” he added.

Around noon, the Dow Jones industrial average was up 108.19 points, or 0.9 percent. The Standard Poor’s 500-stock index gained 13.44 points, or 1 percent, and the Nasdaq composite index was up 18.35 points, or 0.7 percent.

The benchmark 10-year Treasury was 2.25 percent, about even with Friday’s yield.

The Standard Poor’s 500-stock index rose 0.5 percent Friday, after a roller-coaster performance during the week, as investors struggled to assess the impact of the downgrade of United States long-term debt.

In afternoon trading, the Euro Stoxx 50 index, a barometer of euro zone blue chips, rose 1.1 percent, while the FTSE 100 index in London was up 0.8 percent. Gains by Unilever, the British-Dutch consumer products company, and the Swiss drug maker Novartis, helped to support European stocks.

Investors’ attention was focused on a meeting Tuesday of the German chancellor, Angela Merkel, and Nicolas Sarkozy, the French president. 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.

Analysts have said that the meeting falls at a time when investors need to hear from government leaders about new policy measures aimed at addressing some of the debt issues. Mr. Price said the expectation of additional steps could be helping lift stocks on Monday.

“At least that is what the market is perceiving,” said Mr. Price.

Asian shares rose Monday, with the Tokyo benchmark Nikkei 225 stock average gaining 1.4 percent.

The main Sydney market index, the S.P./ASX 200, jumped 2.6 percent. In Hong Kong, the Hang Seng was up 3.3 percent, and in Shanghai, the composite index rose 1.3 percent.

Comex gold futures were down 0.17 percent, to $1,737.20. Crude oil futures for September delivery rose 1.14 percent to $86.35.

Many European investors were taking the Assumption Day holiday off, though markets were open for business across most of the Continent.

In Japan, second-quarter gross domestic product data showing that the economy there had contracted less severely than expected also helped lift sentiment.

The statistics, released by the Cabinet Office early Monday, showed that the Japanese economy, which was battered by a huge earthquake and tsunami in March, had contracted 0.3 percent from the previous quarter, indicating that economic activity had rallied more quickly than expected after the disaster.

The dollar was mixed against other major currencies. The euro rose to $1.4419 from $1.4248 late Friday in New York, while the British pound rose to $1.6355 from $1.6276.

But the dollar was higher against the yen, rising to 76.61 yen from 76.67 yen, and rising to 0.7826 Swiss francs from 0.7777 francs. The Swiss currency lost ground amid reports that the Swiss National Bank was preparing to create a temporary peg to the euro.

Both the Swiss and Japanese authorities have watched with alarm as their currencies rose against the dollar, because an overvalued currency can hurt companies’ export earnings and choke off economic growth.

“Decent data on Thursday and Friday last week brought a semblance of stability to markets,” analysts at DBS in Singapore wrote in a research note on Monday, referring to American retail sales and jobless figures that were both relatively upbeat.

“Housing, inflation and industrial production will have the do the trick this week,” the DBS analysts commented. “It won’t be easy.”

Ben Protess contributed reporting. David Jolly reported from Paris and Bettina Wassener contributed reporting from Hong Kong

Article source: http://www.nytimes.com/2011/08/16/business/daily-stock-market-activity.html?partner=rss&emc=rss

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May Consumer Inflation Rose at a Slower Rate

June 16, 2011 by Leave a Comment

Taken together, the reports reflect the impact of some of the global events that took place in recent months.

“Both of them are reflective of the slowdown in the economy that we have experienced over the last few months,” said Russell Price, a senior economist with Ameriprise Financial.

The Labor Department said in its monthly report that the Consumer Price Index, the most widely used gauge of inflation, was up 0.2 percent in May, compared with 0.4 percent in April, and up 3.6 percent from a year ago before seasonal adjustment.

The monthly rise in the C.P.I. was the lowest since November, when the index was up 0.1 percent, the department’s Bureau of Labor Statistics said.

Analysts had forecast smaller increases: a monthly rise of 0.1 percent in May and a 3.4 percent rise for the 12-month period.

The overall C.P.I. reflected rising food prices, with the food index up 0.4 percent, the same as the previous month. The energy index fell by 1 percent in May, including a 2.0 percent decrease in the gasoline component, making it the first time gasoline has declined since June 2010.

Paul Ballew, a former Federal Reserve economist and now the chief economist at Nationwide, said the C.P.I. data was “not great news” but also “not devastating.” While there are no job or income gains to result from such a modest rise, there is still enough inflation to affect consumers’ pocketbooks, and businesses are faced with costs pressures but no revenue increases, he noted.

“It is not that inflation is roaring ahead, but there are enough price pressures to put a squeeze on consumers and businesses,” he said.

When the traditionally volatile prices for energy and food are stripped out, the core C.P.I. in May recorded its largest increase since July 2008. It was up 0.3 percent in May, compared with 0.2 percent in April, and reached 1.5 percent in the 12-month period, the department said. The monthly indexes for May were above analysts’ forecasts of 0.2 percent and 1.4 percent for the year.

Prices for clothes, shelter and new vehicles contributed to the price acceleration last month, the department said, while there were declines in airline fares, tobacco and personal care items.

In another report released on Wednesday, manufacturers in the New York region reflected less optimism about business conditions. The Empire State Manufacturing Survey, released by the Federal Reserve Bank of New York, indicated that conditions for manufacturers deteriorated in June, as measured by the survey’s general business conditions index, which fell 20 points to minus 7.8 points, dipping below zero for the first time since November 2010.

Mr. Ballew, the former Fed economist, said that the C.P.I. and Fed reports add up to a “flat spot” as the economy recovers.

“We have a fragile economy,” he said. “It is a reflection that we have a long way to go to correct the imbalances that we are all dealing with.”

Analysts had expected a decline in the Empire State index but forecast that it would remain above zero, at 14 points.

In addition, the survey’s future general business index fell compared with its level in May, suggesting that optimism about the next six months has deteriorated. It was down 30 points, to 22.5, its lowest level since early 2009, the survey said.

The new-orders and shipments indexes posted steep declines and fell below zero, the report said. The indexes for number of employees, prices paid and prices received were also lower.

Mr. Price noted that automobile production in the United States declined in April after the March earthquake and tsunami in Japan, contributing to a moderation in business activity. Demand has softened because of the recent spike in gasoline prices.

A third report from the Federal Reserve showed that industrial production rose 0.1 percent in May, after no growth in April because of the Mississippi River flooding and the effects on business related to Japan, analysts said. The report showed a 0.4 percent increase in manufacturing production in May that was mostly offset by a 3.3 percent decline in electric utility production. 

Article source: http://feeds.nytimes.com/click.phdo?i=ecc30ead124eb285696e1f28070ac7b5

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