"Economists are pessimists: they've predicted 8 of the last 3 depressions."
--Barry Asmus

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Thursday, February 3, 2011

Productivity And Costs And First Time Jobless Claims

This is looking to be a morning full of economic measures. Coming out at 8:30 AM EST we have the big boys on the Street, First Time Jobless Claims and Productivity and Costs. Then, at 10 AM EST, we have the ISM Non-Manufacturing Index and Factory Orders.
As far as First-Time Jobless Claims are concerned, we had a miserable week last week. Initial jobless claims hit a seasonally adjusted 454,000 for the week ending 1/22. For the week ending 1/29, there does seem to be a little optimism (possibly driven, in part at least, by yesterday's pretty good jobs reports from ADP and Challenger), and we're looking at a consensus expectation of 425,000.
So, was the optimism of the analysts justified? According to the US Department of Labor, their only failing was that they were not optimistic enough. On the down side, the initial jobless claims figures were revised upwards to 457,000 (not so good). But then, the seasonally adjusted initial claims for the week ending 1/29 came in at 415,000 - beating expectations by 10,000. Meanwhile, the seasonally adjusted insured unemployment level fell to 3,925,000 - a nice decline from the previous week's revised level of 4,009,000.
The unadjusted figures are 459,683 new jobless claims (still down 26,633 from last week) and an insured unemployment level that increased 5,274 to a level of 4,619,319. 25 states saw first-time claims fall by more than 1000, and only 4 states saw claims increase by more than 1000.
In a word: not bad[1]. The markets should be happy about this.
Then, looking at Productivity and Costs, Q3 2010 saw a 2.3% increase in nonfarm productivity, and a 0.1% decrease in unit labor costs. For Q4 2010 the analysts are expecting the exact same thing - a 2.3% increase in nonfarm productivity and a 0.1% decrease in unit labor costs.
Much as was the case with First-Time Jobless Claims, the Bureau of Labor Statistics is telling us that the analysts weren't optimistic enough. Nonfarm labor productivity increased 2.6% in Q4 2010, driven by a 4.5% increase in output and a 1.8% increase in hours worked. meanwhile, unit labor costs decreased by 0.6%, driven by the fact that the increase in productivity (up 2.6% as we just saw) outpaced the increase in average hourly compensation over the same time (up 1.9%).
So we're off to a good start. Now, if the Middle East can keep from descending into anarchy and bloodshed, maybe the markets will be up today.
[1] Yeah, I know. "Not bad" is two words. Here's another word: "so what'?

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