U.S. Import and Export Price Indexes News Release

 

Bureau of Labor Statistics

The latest U.S. Import and Export Price Indexes news release has been posted on the BLS website at http://www.bls.gov/news.release/pdf/ximpim.pdf and also archived at http://www.bls.gov/news.release/archives/ximpim_11102011.pdf. Highlights are below. Import prices dropped 0.6% in October, export prices fell by 2.1% 11/10/2011 U.S. import prices declined 0.6 percent in October, after recording no change in September. Decreasing prices for both nonfuel and fuel imports contributed to the October drop. Export prices fell 2.1 percent in October, the largest monthly decline since a 2.2 percent decrease in December 2008. HTML | PDF

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International Trade

International Trade is one of those justifiably influential reports.  Even if you've never paid attention to it before, you've heard of it.  Of course, if you don't follow the economic indicators, you've probably heard of it under a different name:  the US trade deficit.  And that's exactly what International Trade is:  the difference in total dollars between what we import and what we export.  In theory, it could be a trade surplus as well, but that hasn't been seen since 1975 (when our trade surplus was $12.5 billion).

 

Why is this influential, though?  Well, it directly impacts gross domestic product, which is the sum of government spending plus private sector spending plus consumer spending plus trade surplus.  So, if we have a shrinking trade deficit, that directly implies a growing GDP.  Of course, if the trade deficit expands, that directly implies a shrinking GDP.  And since GDP is used as a direct measure of the overall health of our economy, that means a growing trade deficit is a bad thing[1].

 

The August trade deficit was reported at $45.6 billion.  For September, the Econoday-surveyed analysts are expecting to see it grow in size to a level of $46.3 billion, with a range between $44.2 billion and $49.5 billion.

 

Of course, that's just the analyst expectations.  For the actual figures we turn to the U.S. International Trade In Goods and Services Report, where we learn the following:

• The August trade deficit was revised to only $44.9 billion, which is a good thing (it got smaller).
• The September trade deficit (technically the goods and services deficit) is calculated at $43.1 billion, which handily beats expectations.

That would seem to be a positive trend, if you can rationally call two months of data a trend.  Let's hope we see this continue in the coming months.

 

[1]  There are probably economists out there with elegant mathematical theories that would be willing to argue that it actually isn't a bad thing.

First Time Jobless Claims

Well, it's Thursday.  And if it's Thursday, that means it's time for the First Time Jobless Claims report!

 

To start with, let's recap last week.  The advance figure for initial claims for the week ending 10/29 came in at 397,000 (which beat the expected 400,000 new claims), and the advance figure for actual initial claims came in at 366,923.  Meanwhile, the total number of people claiming benefits in all programs (for the week ending 10/15) came in at 6,781,690.

 

So that was the past.  And while we wait with baited breath for the release of the report, let's see what the Econoday-surveyed analysts are forecasting.  Their consensus estimate is the same as last week:  400,000 new claims, with a range of anywhere from 394,000 to 410,000.

 

Of course, for the actual results, we turn to the US Department of Labor and their Unemployment Insurance Weekly Claims Report.  A review of that report reveals the following details:

• The seasonally adjusted initial claims for the week ending 10/29 have been adjusted upwards to 400,000, meaning that last week no longer beat expectations.
• The advance seasonally adjusted initial claims for the week ending 11/5 are being reported at 390,000, which beats expectations handily until they are (most likely) revised upwards next week.
• The actual number of initial claims for the week ending 11/5 is being reported at 398,753.
• The total number of people claiming benefits in all programs for the week ending 10/22 is reported at 6,835,604.

So, the markets will probably take this as a good sign.  And then they'll wait to see if Greece explodes.

Employment Situation

There's really only one market indicator coming out today, but it's a big one: the Employment Situation report.  this report is the official word on how many nonfarm jobs (and how many nonfarm private sector jobs) were created for the previous month, what the unemployment rate is, how much average hourly earnings changed, and what the average work week is.  A good Employment Situation report creates joy and thanksgiving in the market place, because it points to a healthy economy.  A bad Employment Situation report?  Not so happy.

 

In September we saw 103,000 total new nonfarm payrolls (with 137,000 new private sector jobs, which does imply a loss of 34,000 public sector jobs).  The unemployment rate was 9.1%, average hourly earnings increased 0.2%, and the average workweek was 34.3 hours.

 

The Econoday-surveyed analysts aren't feeling like things will change much in October.  They're calling for a decline in the rate of job creation, with 90,000 total new nonfarm jobs (and 120,000 new private sector jobs), and no other changes.

 

And to find out how we actually did, we turn to the Bureau of Labor Statistics' Employment Situation Summary.  To start with, nonfarm payroll employment increased 80,000 in October and private sector employment increased by 104,000 (missing expectations in both cases).  The unemployment rate fell to 9.0%, average hourly earnings increased 0.2%, and the average work week remained steady at 34.3 hours..

 

Now, let's return to that 9.0% unemployment rate for a second.  That indicates 13.9 million people unemployed.  But the BLS has a very specific definition of "unemployment", meaning "people not working, but who have looked for work in the past 4 weeks".  It doesn't include people who are "employed part time for economic reasons" (8.9 million people) or "persons marginally attached to the labor force" (2.6 million people).  That first category is people who want permanent full-time employment, but are working part-time jobs because they can't find full-time work.  The second category is people who are not working, want employment, and have looked for work in the last twelve months.

First Time Jobless Claims

First up for today's economic data is First Time Jobless Claims.  This particular report is a look at, well, exactly what it sounds like.  How many people filed for unemployment insurance for the first time in a given week.  The figures come in two flavors:  seasonally adjusted (which attempts to make allowances for seasonality[1]) and unadjusted (the actual raw number of claimants).  Also, bear in mind that on the release date we get an advance figure - essentially a preliminary estimate that is adjusted to a final result on the following week[2].  The report also provides a total number of people receiving unemployment insurance in all programs for a given week (although that figure is on a two week delay).

 

Last week, we saw a total of 402,000 new (seasonally adjusted) claims for the week ending 10/29.  This week, the Econoday-surveyed analysts are feeling just very mildly optimistic, and are expecting first time claims to fall to only 400,000 new claimants.

 

For the actual data, we turn to the US Department of labor, and the (recently renamed) Unemployment Insurance Weekly Claims Report.  As anticipated, we see that the seasonally adjusted initial claims for the week ending 10/22 have been revised upwards to 406,000.  Meanwhile, the advance figure for seasonally adjusted  initial claims for the week ending 10/29 came in at 397,000 - beating expectations (although it remains to be seen whether expectations will still be beaten when they get revised on the 10th).

 

The advance figure for actual initial claims came in at 366,923, a decline of 10,433 from 10/22, while the total number of people claiming benefits in all programs for the week ending 10/15 came in at 6,781,690 (an increase of 103,117 from the previous week).

 

So we beat expectations, and beat it on a fairly important and market-moving economic measure.  Combine this with the euphoria in the markets about the possibility that the Greek government will collapse and/or the possibility that Greece will be thrown out of the EU, and we may be looking at a good day in the markets.

 

[1]  Barron's Dictionary of Finance and Investment Terms, Seventh Edition, defines "seasonality" as:  variations in business or economic activity that recur with regularity as the result of changes in climate, holidays, and vacations.  The retail toy business, with its steep sales buildup between Thanksgiving and Christmas and pronounced dropoff thereafter, is an example of seasonality in a dramatic form, though nearly all businesses have some degree of seasonal variation.  It is often necessary to make allowances for seasonality when interpreting or projecting financial or economic data[3], a process economists call seasonal adjustment.

 

[2]  The sheer weight of history over the past few years indicates that it will be adjusted upwards, calling into question why everyone gets excited about the advance figures in the first place...

 

[3]  No, I don't know what's wrong with looking at the actual numbers either.

ADP Employment Report

The ADP Employment Report is the second wave of jobs week, and is rather less depressing to look at than the Challenger Job Cuts Report.  Why?  Well, this report looks at the total number of new jobs that were created in the private sector.

 

ADP, or Automatic Data Processing, is "one of the world's largest providers of business outsourcing solutions" (to quote their website).  In essence,if you are a business you can hire them to handle your human resource and payroll needs.  Since they have "approximately 570,000 clients", this puts their fingers on the pulse of private sector employment.  They then take that information and use it to project how the overall employment situation will look for a given month.

 

Last month, ADP reported 91,000 new private sector jobs were created in September.  This month, the Econoday-surveyed analysts are feeling even more optimistic, and are expecting a consensus average of 100,000 new jobs for October (although the spread is 38,000 to 139,000 new jobs).  Are they right?

 

According to the October 2011 ADP National Employment Report the analysts were, if anything, not optimistic enough.  September jobs were revised upwards to 116,000, and October saw US nonfarm private business employment increase by 110,000.  So yeah, beating expectations by 10% is nice.  Most of the gains came from the service-providing sector with an increase of 114,000, which helped offset declines in the goods-producing sector (down 4000) and the manufacturing sector (down 8000).  Small business employment increased 58,000, medium business employment rose 53,000, and large business employment fell 1000.

Employment Situation News Release

I know I've been a bit of a slacker on these updates this week, and I'll get back to them on Tuesday.  But have a look at this.  We added 0 jobs in August.

 

Expect market panic, going into Labor Day.

---

Bureau of Labor Statistics

The latest Employment Situation news release has been posted on the BLS website at http://www.bls.gov/news.release/pdf/empsit.pdf and also archived at http://www.bls.gov/news.release/archives/empsit_09022011.pdf. Highlights are below. Payroll employment unchanged (0) in August; unemployment rate holds at 9.1% 09/02/2011 Nonfarm payroll employment was unchanged (0) in August, and the unemployment rate held at 9.1 percent. Employment in most major industries changed little. Health care continued to add jobs; a decline in information employment reflected a strike. Government employment continued to trend down. HTML | PDF | Commissioner's Statement

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Q2 2011 Gross Domestic Product, First Revision

This is it.  The ur-metric.  The Platonic form of economic figures.  Everything else we look at is just an aspect, a shadow, of the Gross Domestic Product.  Everything else measures portions of the economy, but the Gross Domestic Product is the economy.

 

Of course, what we have today isn't all that impressive.  Last month, we got an initial release of data, subject to revision twice.  That data showed that GDP grew at an annual rate of 1.3% for the quarter (substantially missing expectations), and that the GDP price index increased at an annual rate of 3.2% (also badly missing expectations).  Current-dollar personal income increased 4.2%, personal current taxes increased $22.6 billion, and personal outlays increased 3.1%.

 

This month, we get the initial revisions.  So we're a little closer to knowing how the economy actually performed in Q2, but we won't have any actual number until this time next month.  The Econoday-surveyed analysts are pessimistic, expecting the Q2 GDP growth to be revised downwards to 1.1%, although they are also expecting the GDP price index growth to be revised downwards to 2.3%.

 

The Bureau of Economic Analysis provides the actual numbers in their Gross Domestic Product, 2nd quarter 2011 (second estimate) report, and it is a gut punch.  The first revision has adjusted GDP downwards to an annual rate of 1.0% (missing expectations, but still better than Q1's 0.4% growth), while the GDP price index has been adjusted upwards to 3.3%.  Yes, that means that economic growth is trending downward while costs are increasing.

 

So, yeah.  Not a good sign, and I would expect the markets to react in a negative fashion.  Any overwhelming hysteria will probably hold off until around 10:30 or so, because Federal Reserve Chairman Ben Bernanke will be speaking on the economy at a Kansas City Fed conference at 10 AM today.

First Time Jobless Claims

Oh my gosh!  Did he finally write a market news post?  Yes he did!  Wow!

 

Self-sarcasm aside, it's time for the oft-depressing First Time Jobless Claims report.  If you recall from last week, we had a week of bad news.  The 8/6 initial jobless claims were adjusted downwards to 399,000, but the 8/13 advance figure for seasonally adjusted claims came in at an expectations-missing 408,000.  The unadjusted number of actual initial claims for 8/13 was at 342,669 (down 8,701 from the previous week), and the total number of people claiming benefits in all programs fell to 7,336,178 (a decline of 143,737, which we established wasn't as much good news as it sounds like).

 

For the week ending 8/20, the Econoday-surveyed analysts are anticipating tepid improvement.  They're looking for a consensus estimate of 405,000 new claims, with the range between a low of 400k and a high of 415k.

 

For the news on whether or not the analysts are right, and on whether or not crippling despair is likely to crush the spirit of the marketplace, we turn now to the Unemployment Insurance Weekly Claims Report.  Said report begins with the ominous statement:  "Special Factor: As a result of a labor dispute between Communications Workers of America and Verizon Communications, at least 12,500 initial claims were filed in the week ending 8/13/2011 and at least 8,500 initial claims were filed in the week ending 8/20/2011 ."  This has had a noticeable impact on the report.

 

First of all, the initial claims figures for 8/13 have been revised upwards to a level of - wait for it - 412.000.  Yes, that is a 13,000 upwards revision, and it is almost entirely driven by that labor dispute mentioned above.

 

Next, the seasonally adjusted initial claims for 8/20 have missed expectations by a significant degree, coming in at 417,000.  Taking the Verizon news into account, this means that we might have seen the initial claims come in at 409k if the special factor hadn't become a factor.  That would have still been disappointing, of course, but probably not as bad.

 

As far as the actual number of claims go, the total number of initial claims for 8/20 was 341,436, an extremely modest decline in the rate of new claims.  Finally, the number of people claiming benefits in all programs fell (almost) 45k to a level of 7,290.189.  Whether that is good or bad news is left as an exercise for the reader.

FW: First Time Jobless Claims

And, of course, we have the first time jobless claims.  If you're new to this, this report is a measure of how many people filed for unemployment insurance in the previous week.

 

Last week, the figures for the week ending 8/6 were better than expected.  New claims for 7/30 were revised upwards to 402,000 - technically putting us at 20 upwards revisions in 24 weeks, although it did only increase by 2000 this time.  The seasonally adjusted 8/6 initial new jobless claims figures came in at 395,000 (beating  while the actual numbers came in at 351,370.   and the total number of people claiming benefits in all programs fell to a level of 7,479,915.

 

But all that was last week.  For the week ending 8/13, our Econoday-surveyed analysts are a little less optimistic, and are expecting 400,000 new claims.  To check the accuracy of the prediction, we turn to the US Department of Labor's Unemployment Insurance Weekly Claims Report.

 

Right off the bat, the DoL breaks with tradition by revising the 8/6 seasonally adjusted initial claims downward to 399,000[1].  That's nice to see.  On the other hand, the advance figure for seasonally adjusted initial claims for the week ending 8/13 comes in at 408,000, missing expectations.  The unadjusted number of actual initial claims for 8/13 comes in at 342,669 (down 8,701 from the previous week), and the total number of people claiming benefits in all programs comes in at 7,336,178 (a decline of 143,737)[2]..

 

The markets will probably see beating expectations on new claims as a win.  Will it be enough of a win to offset the CPI results?  We should start finding out here in about 5 minutes.

 

[1]  Improving their batting average to 20 upwards revisions in 25 weeks.

[2]  Sounds nice, doesn't it?  But here's your weekly dose of economic malaise:  the Employment Situation report for July 2011 shows an increase in nonfarm payroll employment of only 117,000.  Now, in the month of July, there were 2,060,000 first time jobless claims.  So 2 million people lost jobs, and only 117 thousand people found jobs.  The operative phrase here is "net loss".

Consumer Price Index News Release

 

Bureau of Labor Statistics

The latest Consumer Price Index news release has been posted on the BLS website at http://www.bls.gov/news.release/pdf/cpi.pdf and also archived at http://www.bls.gov/news.release/archives/cpi_08182011.pdf. Highlights are below. Consumer prices rise 0.5% in July as gas, food, and shelter prices rise 08/18/2011 On a seasonally adjusted basis, the CPI-U increased 0.5 percent in July after falling 0.2 percent in June. The index for all items less food and energy rose 0.2 percent in July after increasing 0.3 percent in June. HTML | PDF | Local and Regional CPI

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Consumer Price Index

Yesterday, we got to see what inflation is doing to consumers.  Now, it's our turn.  It's time for the CPI, and that means inflation.

 

Well, technically it could also mean deflation.  But nobody really expects that, because the Fed distinctly dreads and detests deflation[1].  And also because, low interest rates notwithstanding, there is a huge sum of money sitting out there waiting to roll out and transform our economy.

 

June's inflation results were, and I seem to be saying this a lot, a mixed bag.  Headline inflation - the Consumer Price Index for All Urban Consumers (or CPI-U) - declined 0.2%, which was right in line with expectations.  Core inflation - the CPI-U sans food and energy - increased 0.4%, which was twice the expected increase.  Most of the decline in headline inflation was driven by declining energy costs, as energy CPI dropped 4.4%.  All of which meant that, looking at the rolling year, CPI-U increased 3.6%, core CPI-U increased 1.6%, food CPI increased 3.7% and energy CPI increased 20.1%.

 

So that was June.  For July, the Econoday-surveyed analysts are feeling a little bearish.  They're calling for a 0.2% increase in CPI-U, and a 0.2% increase in core CPI-U.  But, to find out if they're right, we turn to the Consumer Price Index Summary from the Bureau of Labor Statistics.  And, wow.  They weren't bearish enough.

 

CPI-U increased 0.5% in July, badly missing expectations, driven by a 0.4% increase in food CPI-U and a 2.8% increase in energy CPI-U.  For what it's worth, core CPI-U hit right in line with expectations, coming in at a 0.2% increase.  So yes, the Fed will say that inflation is only 0.2%.

 

For the rolling year, CPI-U is still up 3.6%, core CPI-U is up 1.8%, food CPI is up 4.2%, and energy CPI is up 19.0% (with gasoline up 33.3%).

 

So, yeah.  The markets probably won't be happy with this.  Let's see if First Time Jobless Claims improve their mood.

 

[1]  Say that ten times fast.  I dare you . 

World News!

China

• With US Vice-President Joe Biden getting ready to arrive in China, our single largest sovereign debt holder has spelled out exactly what they want to hear from its debtor:  "As the United States' largest foreign creditor, China has much at stake over US economic policy changes and a stable US dollar[1].  Therefore, Washington's handling of all the related issues in a responsible manner will contribute to the steady growth of China-US ties and the stable development of the world economy given the mounting concern about European and US debt woes and fragile global economic recovery."
• Remember the report from a couple of days ago, claiming that Pakistan had given China access to the wrecked stealth helicopter used in the raid that killed Bin Laden?  The Chinese defence minsitry has denied it, and US officials have been unable to confirm the story.

Libya

• Rebel forces have attacked the oil refinery at Zawiyah, one of the last sources of fuel for loyalist troops and the city of Tripoli.  In related news, the rebel National Transitional Council has also denied negotiating a peaceful conflict to the civil war with the Libyan government.

Syria

• The good news is that "shelling and the sound of tank machineguns [are] subdued today".  The bad news is that Syrian "security personnel" are rounding up hundreds of people in Latakia and forcibly interring them in a stadium.  Condemnations continue to trickle in from the rest of the world[2], with Turkey taking the hardest line to date:  "if the operations continue in Syria and the operations become a regional problem Turkey can naturally not remain indifferent".

United States

• Texas governor and Republican presidential candidate Rick Perry declared that it would be "treasonous" if Ben Bernanke "prints more money between now and the election".  He didn't quite advocate murder as a response, but it's hard to interpret the following comment in a different light:  "If this guy prints more money between now and the election, I don't know what y'all will do to him in Iowa, but we would treat him pretty ugly down in Texas."
• President Obama's response to Governor Perry's remarks?  "You know, Mr. Perry just got into the presidential race.  I think that everybody who runs for president, it probably takes them a little bit of time before they start realizing that this isn't like running for governor or running for senator or running for Congress, and you've got to be a little more careful about what you say.  But I'll cut him some slack.  he's only been at it for a few days now."
• Warren Buffett - yes, that Warren Buffett - has suggested that the US "Stop Coddling the Super-Rich".
• In "you know, they were called coffin nails in the 19th century" news, RJ Reynolds Tobacco, Lorillard Tobacco, Commonwealth Brands, Liggett Group and Santa Fe Natural Tobacco have filed suit against the Food and Drug Administration to stop a new law that would require them to place graphic health warnings on cigarette packets.  The suit claims that the law violates their constitutional right to free speech.

[1]  To quote Xinhua:  "Among China's more than 3 trillion dollars foreign exchange reserves, 1.16 trillion dollars were US Treasuries bonds as of May, according to the US Treasury Department.  'If the greenback devalues by 10 percent to 20 percent, China will suffer another loss of as much as 200 billion to 300 billion in the near future,' according to Chen Xiankui, a professor at Renmin University of China."

[2]  Polonius:  What do you read, my lord?

     Hamlet:  Words, words, words.

Producer Price Index News Release

 

Bureau of Labor Statistics

The latest Producer Price Index news release has been posted on the BLS website at http://www.bls.gov/news.release/pdf/ppi.pdf and also archived at http://www.bls.gov/news.release/archives/ppi_08172011.pdf. Highlights are below. In July the PPI for finished goods increases 0.2% and finished core advances 0.4% 08/17/2011 The Producer Price Index for finished goods rose 0.2 percent in July, seasonally adjusted. This advance followed a 0.4-percent decrease in June and a 0.2-percent rise in May. Prices for finished goods less foods and energy rose 0.4 percent. HTML | PDF

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Producer Price Index

We've only got one major piece of market data today, but it's a big one:  the Producer Price Index (or, more precisely, indexes).  Given the title of this news item, this should be no surprise.

 

The Producer Price Index is actually a set of indexes that measure the change in costs of supplies used by manufacturers at all stages of the manufacturing and production process - raw materials, intermediate goods, and finished products.  It's very much like the Consumer Price Index, except for producers, because it is essentially a measure of inflation.  If PPI is up, you can expect to see it eventually flow through to the CPI as well - although not always at a 1:1 ratio.  After all, a lot of manufactured goods are discretionary, and if the prices go up too far people will just refuse to buy them.

 

Nevertheless, the market pays attention to this figure.  Rising costs, particularly if they don't get passed on to the consumer, cut into corporate profits

 

The June 2011 results were mixed.  PPI for finished goods fell 0.4% (beating expectations), but core PPI rose 0.3% (missing expectations).  The overall change in PPI was driven by a 2.8% decrease in finished energy.  Intermediate goods PPI changed 0.0%, and crude goods PPI fell 0.6%.

 

For July 2011, the Econoday-surveyed analysts aren't quite as optimistic.  They're calling for a 0.0% change in PPI for finished goods, and a 0.2% increase in core PPI for finished goods.  And as always, we turn to the US Bureau of Labor Statistics' Producer Price Indexes - July 2011 to see if the analysts are right.  And the short answer is that they are not right.

 

The Producer Price Index for finished goods actually rose 0.2% (missing expectations), and the core Producer Price Index rose 0.4% (also missing expectations).  The report pins the blame for the core PPI increase on a 2.8% increase in tobacco product prices[1], as well as on an increase in the cost of light motor trucks and pharmaceutical preparations.  The increase in overall PPI is blamed on finished consumer foods, which increased 0.6% (driven by a 2.7% increase in beef and veal prices and by higher prices for fresh fruits and melons), offset slightly by a 0.6% decline in finished energy prices (led by gasoline, which fell 2.8%).

 

PPI for intermediate goods rose 0.2%, mostly on a 2.1% increase in the cost of plastic resins and materials.  PPI for crude goods fell 1.2%, driven by a 2.6% decline in crude energy materials and a 0.8% decline in crude foodstuffs and feedstuffs.

 

All in all, not great.  But far from terrible, really.

 

[1]  Tobacco:  not food, and not energy.

World News!

Libya

• Libyan rebels have seized control of the coastal town of Zawiyah,, 30 miles west of Tripoli, giving them the ability to halt food and fuel shipments from Tunisia to the capitol.

Pakistan

• In "just when you though relations couldn't get any worse" news, the Financial Times has reported that Pakistan gave China access to the crashed US stealth helicopter that was part of May's commando raid to kill Osama bin Laden.  The reports indicate that China was allowed to take pictures and samples of the aircraft's skin.  Pakistan has officially denied the report.

South Korea

• South Korean civilians were evacuated into emergency shelters around 2 PM local time, as North Korea fired artillery at Yeonpyeong Island.  Again.

Syria

• Syria is on its thrid day of brutal tank-based repression of protests in the port city of Latakia[1], supplementing the conventional ground forces with naval bombardments.  Fortunately, according to the official Syrian news agency, the tank-based "order preservation forces" are entirely blameless;  all of the damage and civilian deaths are being caused by armed terror gangs "using machineguns and explosives from rooftops and from behind barricades".

United States

• According to Mitt Romney, "Corporations are people".

[1]  They're on month 5 of the brutal tank-based repression of the populace in general.  Kinda makes you wonder where the outrage from NATO and the UN is, doesn't it?

First Time Jobless Claims

And of course, we have the first time jobless claims.  What can I say about this that hasn't already been said?

 

Last week, the analysts were expecting a seasonally-adjusted 403,000 new claims for the week ending 7/30.  We came in at 401,000, which beat expectations right until the almost inevitable moment today in which that figure is revised upwards[1].  Unadjusted initial claims for the same period declined 27,230 to a level of 339,348, and the total number of people claiming benefits in all programs (for the week ending 7/16) came in at 7,570,439.

 

The Econoday-surveyed analysts are not expecting the week ending 8/6 to be so good.  They are calling for 405,000 new claims for the week.  Are they right?  Well, history seems to show that they aren't, but let's look and find out anyway.

 

Right off the bat, the Unemployment Insurance Weekly Claims Report shows my continuing skepticism about the advance figures is justified.  But only slightly, this week.  The new claims for the week ending 7/30 were revised upwards to a level of 402,000[2].  And now, here's where the interesting data happens:  for the week ending 8/6, the advance figure for seasonally adjusted initial claims comes in at 395,000 - substantially beating expectations.  On the down side, the unadjusted initial claims figures for the same week rose 12,022 to a level of 351,370.  The total number of people claiming benefits in all programs fell 90,524 to a level of 7,479,915[3].

 

So, we had a dose of good news for the markets that are feeling spooked by current economic conditions.  Will it be enough to turn things around?  No, probably not.  Not on its own, anyway.

 

[1]  We're sitting at 19 upwards revisions out of 23 weeks, so we have an 82.61% chance of an upwards revision.

[2]  So yes, that does put us at 20 upwards revisions out of 24 weeks.  But it seems almost petty to lament an upwards revision of 2000.

[3]  A fact that is not, as I have remarked before, necessarily good news.

International Trade

The International Trade Balance - aka the US International Trade in Goods and Services report - is a look at the nation's trade deficit.  Or, theoretically, our trade surplus.  It's a pretty hefty report as economic indicators go, because it's added to the sum of consumer spending plus private investing plus government spending to determine what our GDP is.  And since we've been running a trade deficit for decades now, meaning nobody seriously expects to see a surplus when the report comes out, the markets get happy when the trade deficit shrinks.

 

Last month, there was no happy for the markets.  The analysts had been expecting the trade deficit to decline $1 billion to a level of $42.7 billion.  Unfortunately, the sad reality was that our trade deficit increased $6.5 billion to a level of $50.2 billion, driven by a decrease in industrial supplies and materials exports and an increase in imports of industrial goods and supplies and of capital goods.

 

But hope springs eternal, and the Econoday-surveyed analysts are expecting June to be a better month.  They're looking for a $2.2 billion decline in the trade deficit, bringing it to a new level of $48 billion.

 

Turning now to the joint US Census Bureau/US Bureau of Economic Analysis report, we see that hope - far from springing lightly - has been crushed to earth by the iron-shod fist of reality.  The trade deficit did not decline $2.2 billion.  It did not decline at all.  Rather, it increased $2.9 billion to a level of $53.1 billion.

 

So, yeah.  No happy for the markets on this front this month either.

First Time Jobless Claims

It's that time of the week already.  So let's brace ourselves for the last bit of employment data we get before tomorrow's Employment Situation report - the oft-revised First Time Jobless Claims!

 

Last week, the seasonally adjusted initial claims figures for the week ending 7/23 came in at 398,000.  Which nicely beat expectations (except for that pesky 87.81% chance that it will be revised upwards today).  Actual initial claims fell as well, dropping to a level of 366,578, with the total number of people claiming benefits in all programs for the week ending 7/9 rising to 7,645,601.

 

And what are the Econoday-surveyed analysts thinking for the week ending 7/30?  They're thinking that we'll see an uptick in the number of people filing for benefits, and the consensus prediction is for a seasonally-adjusted 403,000 new claims.  But are they right?  Let's go to the Unemployment Insurance Weekly Claims Report and find out.

 

First off, to nobody's surprise, the figures for 7/23 were revised upwards to 401,000 new claims[1].  The advance figure for seasonally adjusted initial claims for the week ending 7/30 then comes in at 401,000, beating expectations by 2000.  The unadjusted initial claims for the same period come in at 339,348, a decline of 27,230.  And the total number of people claiming benefits in all programs for the week ending 7/16 comes in at 7,570,439 (a decline of 75,162).

 

All things considered, this wasn't too bad a report.

 

[1]  Still beating last week's expected 423k new claims, but also meaning that we now have 19 upward adjustments out of 23 total weeks

This Is The First Day Of The Rest of Your Fiscal Life, And Here Is The World News!

Australia

• Bomb-disposal teams have surrounded a house in Sydney.  Reports are that an 18-year-old woman is inside, with a bomb and a ransom note strapped to her.  Police have not confirmed the details, but have said they are treating the device as live until it can be proven otherwise.

Japan

• Parliament has approved a plan to help TEPCO compensate individuals affected by the Fukushima Daiichi power station disaster.  The government will put an initial 2 trillion yen (about $26 billion) into the compensation pool.  TEPCO will then restructure, and then the restructured company and other nuclear power companies will make annual contributions (in an unannounced amount) to the pool.  Most analysts assume that, rather than shouldering the financial burden, the cost of the contributions will simply be passed along to consumers.
• Japan's annual defense report is warning of increased Chinese naval activity in the East and South China Seas, and expressed concerns that this could lead to a potential conflict.

Libya

• Loyalist forces have launched a counter-offensive against rebels near Zlitan.

United Kingdom

• In "behold the oncoming Singularity" news, a 40-year-old man dying of heart failure has been released from Papworth Hospital in Cambridgeshire after having an artificial heart implanted - the first man ever discharged with an entirely mechanical heart.  This is still considered a stopgap until a real heart can be acquired for transplant, and it does require a 13.5 pound backpack motor, but still.  Suddenly, it feels like I'm living in the future.
• Using a particular method of examining variations in the cosmic background radiation, cosmologists at University College London believe they have found the signature of four other universes created near our own..These other universes would have collided with ours early in the formation of the early universe, and are most likely absolutely inaccessible now due to the expansion of space-time.

United States

• In "And that's when the Duke boys knew they should consider an IPO" news, the Dark Corner Distillery is taking advantage of new micro-distillery laws in South Carolina to sell moonshine.  Legally.
• Weighing in with Fitch, Moody's has reiterated its Aaa rating for US sovereign debt.  For the moment.  There is still a negative outlook on the US, meaning a downgrade is still possible in the next 12 to 18 months.  Now everyone is just waiting to see what Standard & Poor's will do.
• The computer security McAfee has discovered the largest and most comprehensive series of cyber attacks known to date.  The attacks date back to 2006, and the 72 affected organizations include the US, Taiwan, India, South Korea, Vietnam, Canada, the Association of Southeast Asian Nations, the International Olympic Committee, the World Anti-Doping Agency, and the United Nations.  In most cases, the hackers (not named publically by McAffee, but said to be China) obtained access and simply used it to review secure information.
• A meter wide spherical tank from the space shuttle Columbia - the one that burned up in re-entry in 2003 - has been found in a drought-strcken lake near nacogdoches, Texas.
• Researchers with the Herschel Oxygen Project have found free molecular oxygen - the type of oxygen we breathe - in a star-forming nebula in the constellation of Orion.  This represents the first discovery of molecular oxygen in space - something that had been hypothesized but never verified before.

ADP Employment Report

Here's a report I've neglected for a few months.  A pity, that, since it makes a nice counterpoint to the Challenger Job Cuts Report.

 

ADP is, of course, Automatic Data Processing, self described as "one of the world's largest providers of business outsourcing solutions".  Specifically, they do HR and payroll, putting them in an admirable position to get a sense of how many people are getting hired by employers.  They take that data and process it into a market-impressing calculation of how many new jobs have been created in the US nonfarm private business sector.

 

For July, the Econoday-surveyed analyts are anticipating a subdued 86,000 private sector job gain.  So, without further ado, let us turn to the July 2011 ADP National Employment Report for the details.  And the basic details are an expectations-beating 114,000 new nonfarm private business sector jobs.  That's 121,000 new jobs in the service-providing sector, 7000 jobs lost in the goods-producing sector, and 1000 jobs lost in the manufacturing sector.

 

So, yeah.  That's not so good.  Sure, it's a lot of jobs - 55,000 in "professional business services" and 48,000 in "education and healthcare"[1].  But it's declines in the jobs that make things.  That implies serious (and ongoing) manufacturing weakness, which is a potential long-term obstacle for GDP growth.

 

Most of the job growth came from small and medium businesses (58,000 and 47,000, respectively).  Only 9000 new jobs were created by large companies.

 

[1]  All right, all right.  I'll concede that more doctors, nurses, and teachers are probably a good thing for the long term economic growth of our nation.

Challenger, Gray & Christmas Job Cuts Report

Yep, it's that time of the month again.  The time in which we begin the run-up to Friday's Employment Situation report.  And that means we kick off the festivities with data from Challenger, Gray & Christmas - the outplacement consulting firm - about how many layoffs were announced in a given month.  Not how many happened in a given month (that's a different report), but how many companies have announced in a specific month for the future.

 

Clear as mud?  Good.

 

June would have been a disappointing month, except that the analysts don't really care about this report.  They have a tendency to just look at the First Time Jobless Claims and at the Employment Situation itself.  Still, June saw an 11.6% increase in announced layoffs, hitting an anticipated 41,432 total job cuts.  The government and non-profit sector continued to lead the pack with 10,176 announced layoffs (24.6% of the total).  Second place was claimed by the health care and products sector, with 3,729 announced layoffs (9% of the total) - the food sector almost tied for second, announcing 3,500 layoffs (8.4% of the total).  Restructuring took the lead slot in "job cut reasons" at 36.6% of the total, followed by cost-cutting (24.1%) and closing (18%).

 

Hitting the July report, we see a lot of potential bad news coming down the tubes.  There were 66,414 layoffs announced in July, a 60% increase from June.  38,100 (57%) came from five companies:  Merck, Borders, Cisco Systems, Lockheed Martin, and Boston Scientific.  As a result, Government and nonprofit slipped to third place in the "most announced layoffs" event, announcing only 9389 planned job cuts (or 14% of the total).  Pharmaceuticals led the pack with 13,493 planned layoffs (20.3%), followed closely by retail's 11,245 announced layoffs (16.9%).

 

Looking at "job cut reasons", closing took the lead with 18,127 (27.3%) of the planned layoffs, followed by cost-cutting at 13,171 (19.8%) planned layoffs, and by competition's 13,000 (19.6%) planned layoffs.

 

Employment prospects don't look amazingly good for the next few months.