Afternoon Note
The major equity indices shook off losses from earlier this week and were all trading in the green for most of the session. This was influenced by the European Central Bank (ECB) announcing that its $1.11 trillion stimulus plan will be put into play this coming Monday and the bank will begin purchasing bonds. This is an important step in taking better control of inflation. Gross domestic product growth (GDP) estimates for the Eurozone have been revised higher for both FY15 and FY16. Sentiment among consumers and businesses in the area are already picking up. However, the markets have since pulled back and are trading rather flat. Domestically, we had multiple economic data releases that made it difficult for the indices to remain in the green.
Firstly, for the month of February, the Challenger Job Cuts report indicated that the layoff count was 50,579, lower than the January count of 53,041, but significantly higher than the monthly average of 40,000. The energy sector led the decline in layoffs thanks to the crude oil crisis, however, retail followed suit as it continues to reduce the workforce after the holidays. The industrial goods sector also suffered its share of layoffs during the month, more on this later.
Secondly, initial jobless claims are continuing to rise. For the week ended February 28th, initial claims rose as high as 320,000; the street called for 300,000. As illustrated in the chart below, this is the highest level for initial claims since May 2014. The 4-week moving average rose dramatically by 10,250 to 304,750 which is 5,000 higher than the same figure one month ago. Continuing claims, which are a week behind, are also rising. For the week ended February 21st, continuing claims rose 17,000 to 2.421 million resulting in the 4-week average rising to 2.404 million. Considering both the challenger job cuts and the unemployment benefit claims, we anticipate that tomorrow’s jobs number will struggle to beat the street’s expectations of 230,000.
Lastly, the Census Bureau released factory orders for the month of January. For the 6th month in a row, new orders for manufacturing goods decreased, falling 0.2% (or by $900 million) to $470 billion, month-over-month. This is a slight improvement from the 3.5% decrease observed in December. However, when excluding transportation, new orders fell by 1.8%. Shipments also moved lower for the month, falling 2% to $479.1 billion. For the second month in a row, unfilled orders declined, this time by $2.2 billion to $1,163.4 billion. The declines across a majority of the components in the report were influenced by the energy sector. Many businesses in the industrial sector are slimming their capital budgets, increasing deadlines for projects, and temporarily letting go of some of their employees.
Tomorrow, the employment situation report for February and the US international trade gap report for January will be released. Also, we will know just how comfortable consumers really are with their financial situation when we see the consumer credit report tomorrow afternoon.
Comments |
Dems took 25 million from Buffet to vote against pipeline,energy jobs, so he can collect 2 billion from transporting oil in RR cars that burn. He sure can invest! james vallely on 3/5/2015 3:23:28 PM |
Who are we fooling? The rate of unemployment released tomorrow and EVERY month does not adequately represent the 100s of thousands of individuals who have just simply GIVEN UP on trying to find a job...and the Obama administration continues to masquerade the facts by dancing the Secretary of Labor out before the "Drive By Media" and, thus, the majority of American views & listeners, espousing fictional figures that just "Don't Add Up." Any real, TRUE "Recovery" would be producing "Real...TRUE" jobs whose income would thus stimulate our economy and give cause for REAL, SUSTAINED economic growth....not this slow "death-on-wheels" economic "progress?" James Allan on 3/5/2015 6:45:50 PM |
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