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.

World News Debt Ceiling Update!

United States

• The Senate has passed the compromise deficit-cutting/debt ceiling-raising bill by a vote of 74 to 28.
• President Obama has signed the compromise deficit-cutting/debt ceiling-raising bill into law, but reiterated his belief that it will be impossible for the US to "close the deficit with just spending cuts."
• Fitch Ratings has announced that they will maintain their AAA rating on US sovereign debt for the short term, but warned that the US "must also confront tough choices on tax and spending against a weak economic backdrop if the budget deficit and government debt is to be cut to safer levels over the medium term."  S&P and Moody's have not yet weighed in on what action they plan to take, since the compromise did not meet the $4 trillion in cuts the agencies said would be required to guarantee a top rating.