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September 22, 2011

Initial Jobless Claims in U.S. Fell Last Week
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By Alex Kowalski – Sep 22, 2011 7:48 PM GMT+0700

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Job seekers enter the Garden Grove Job Expo in Garden Grove, California, U.S. Economists forecast 420,000 claims, according to the median estimate in a Bloomberg News survey. Photographer: Jonathan Alcorn/Bloomberg

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Sept. 21 (Bloomberg) — Alfred Broaddus, former president of the Federal Reserve Bank of Richmond, Diane Swonk, chief economist at Mesirow Financial Holdings Inc., and Scott Wren, senior equity strategist at Wells Fargo Advisors LLC, offer their views on today’s Federal Open Market Committee decision to replace much of the short-term debt in the Fed’s portfolio with longer-term Treasuries. This report also contains comments from Nigel Gault, chief U.S. economist at IHS Global Insight; Charles Lieberman, chief investment officer at Advisors Capital Management LLC, and Ronald Muhlenkamp, president of Muhlenkamp & Co. (Source: Bloomberg)

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Sept. 22 (Bloomberg) — More Americans than forecast filed first-time claims for unemployment insurance payments last week as the labor market struggled to improve. Applications for jobless benefits decreased 9,000 in the week ended Sept. 17 to 423,000, Labor Department figures showed today. Economists forecast 420,000 claims, according to the median estimate in a Bloomberg News survey. Betty Liu and Michael McKee report on Bloomberg Television’s “InsideTrack.” (Source: Bloomberg)
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Job seekers talk to employers during a job fair at the Park Ridge Community Center in Park Ridge, Illinois. Photographer: Tim Boyle/Bloomberg
More Americans than forecast filed first-time claims for unemployment insurance payments last week as the labor market struggled to improve.
Applications for jobless benefits decreased 9,000 in the week ended Sept. 17 to 423,000, Labor Department figures showed today. Economists forecast 420,000 claims, according to the median estimate in a Bloomberg News survey. The average number of claims in the past month rose for a fifth straight week, to the highest level since July 16.
An elevated level of dismissals raises the odds U.S. companies may put off plans to increase employment, making it difficult for joblessness to fall below 9 percent. Citing ongoing weakness in the labor market, Federal Reserve policy makers announced yesterday they would use another unconventional monetary tool to spur economic growth and job gains.
“These numbers are consistent with a job market that is essentially in suspended animation,” said Brian Jones, an economist Societe Generale in New York, who correctly forecast the level of claims. “Anything that the Fed does to help the economy should help the labor market, but it takes time. We’ve got to see job growth before we can get more demand.”
Estimates for first-time claims ranged from 408,000 to 430,000 in the Bloomberg survey of 45 economists. The Labor Department initially reported the prior week’s applications at 428,000.
A Labor Department official said today as the figures were released that the latest week’s data included no special circumstances.
Survey Week
Today’s report represents claims applications that coincide with the survey week for the monthly non-farm payrolls report.
Stock-index futures maintained losses after the figures. The contract on the Standard & Poor’s 500 Index expiring in December declined 2.6 percent to 1,126.1 at 8:43 a.m. in New York. Treasuries rose, pushing down the yield on the benchmark 10-year note to 1.76 percent from 1.86 percent late yesterday.
The four-week moving average, a less-volatile measure, climbed to 421,000 from 420,500.
The number of people continuing to collect jobless benefits fell by 28,000 in the week ended Sept. 10 to 3.73 million. The continuing claims figure does not include the number of workers receiving extended benefits under federal programs.
Those who’ve used up their traditional benefits and are now collecting emergency and extended payments decreased by about 103,350 to 3.5 million in the week ended Sept. 3.
Unemployment Rate
The unemployment rate among people eligible for benefits, which tends to track the jobless rate, held at 3 percent in the week ended Sept. 10, today’s report showed. Forty-three states and territories reported a decrease in claims during that week, while 10 had an increase.
Initial jobless claims reflect weekly firings and tend to fall as job growth — measured by the monthly non-farm payrolls report — accelerates.
Following a two-day meeting, Fed policy makers announced yesterday they would replace some notes in their portfolio with longer-term Treasuries to further reduce borrowing costs and keep the economy from relapsing into a recession.
“Economic growth remains slow,” the Federal Open Market Committee said in a statement describing the central bank’s actions. While officials said they “expect some pickup in the pace of recovery over coming quarters,” they anticipate “the unemployment rate will decline only gradually toward levels” consistent with their mandate for maximum employment.
Federal Reserve
The Fed left unchanged its pledge to keep the benchmark interest rate near zero through at least mid-2013 so long as unemployment remained high and the inflation outlook stayed “subdued.”
Total payrolls were unchanged last month, the weakest reading since September 2010, and the unemployment rate held at 9.1 percent, the Labor Department said Sept. 2.
There are some bright spots for employment in the U.S. Capital One Financial Corp., the lender that would become the fifth-biggest U.S. bank by domestic deposits with the purchase of an online bank from ING Groep NV, intends to take on another 1,800, the McLean, Virginia-based company said Sept. 19.
Union Pacific Corp. plans to hire 15,000 people in the next 5 years, Chief Executive Officer Jim Young told the Detroit Economic Club on Sept. 20.
Leading Economic Indicators in U.S. Rise 0.3%
By Timothy R. Homan – Sep 22, 2011
The index of U.S. leading economic indicators increased more than forecast in August, easing concern the economy is headed for recession.

The Conference Board’s gauge of the outlook for the next three to six months climbed 0.3 percent after a 0.6 percent gain in July, the New York-based research group said today. Economists projected a 0.1 percent rise in August, according to the median forecast in a Bloomberg News survey.

The figure was boosted by a surge in money supply, a sign investors may be losing confidence in the global economy and reducing their holdings of riskier assets. The Federal Reserve yesterday decided to extend maturities of its Treasury holdings in a bid to push down long-term borrowing costs and said the economy faces “significant downside risks.”

“The state of the economy is extremely fragile,” said John Herrmann, a senior fixed-income strategist at State Street Global Markets LLC in Boston. The jump in money supply is “a sign of risk aversion,” he said.

Another report today showed that more Americans than forecast filed first-time claims for unemployment insurance payments last week, a sign that the labor market is struggling to improve.

Applications for jobless benefits decreased 9,000 in the week ended Sept. 17 to 423,000, according to the Labor Department in Washington. Economists forecast 420,000 claims, according to the median estimate in a Bloomberg survey.

Consumer confidence in the U.S. dropped last week to the weakest point since the recession ended in June 2009, the Bloomberg Consumer Comfort Index showed today. The gauge fell to minus 52.1 in the period to Sept. 18 from minus 49.3 the prior week. Sentiment among men slumped to an all-time low.

Economists’ Estimates

Estimates of the 56 economists surveyed by Bloomberg for the Conference Board’s leading economic index ranged from a drop of 0.5 percent to an increase of 0.5 percent.

“There is growing risk that sustained weak confidence could put downward pressure on demand and business activity, causing the economy to potentially dip into recession,” Ken Goldstein, an economist at the Conference Board, said today in a statement. “While the chance of that happening remains below 50-50, the odds have certainly increased in recent months.”

Four of the 10 components of the leading index contributed to the increase in August. In addition to the money supply and building permits, they included slower supplier-delivery times.

Money supply contributed 0.7 percentage point to the LEI, the most since December 2008.

Monetary Conditions

“The August increase in the U.S. LEI was driven by components measuring financial and monetary conditions which offset substantially weaker components measuring expectations,” said Ataman Ozyildirim, an economist at the Conference Board in a statement today.

The Conference Board’s index of coincident indicators, a gauge of current economic activity, increased 0.1 percent from the prior month.

The coincident index tracks payrolls, incomes, sales and production — the measures used by the National Bureau of Economic Research to determine the beginning and end of U.S. recessions.

The gauge of lagging indicators rose 0.3 percent last month. The index measures business lending, length of employment, service prices and ratios of labor costs, inventories and consumer credit.

LEI Makeup

Seven of the 10 indicators that make up the leading index are known ahead of time: stock prices, jobless claims, building permits, consumer expectations, the yield curve, factory hours and supplier delivery times. The Conference Board estimates new orders for consumer goods, bookings for capital goods and money supply adjusted for inflation.

“The consumer is, from what we can tell, quite cautious,” Ken Powell, chairman and chief executive officer of Minneapolis- based General Mills Inc. (GIS), said in a conference call with analysts yesterday. “We think that the environment there is going to continue to be challenging.”

The U.S. economy, the world’s largest, expanded at a 1 percent annual rate in the second quarter after growing at a 0.4 percent pace in the prior quarter, according to Commerce Department figures.

Payrolls were unchanged in August, as the unemployment rate held at 9.1 percent, the Labor Department said Sept. 2.

‘Downside Risks’

“There are significant downside risks to the economic outlook, including strains in global financial markets,” the Federal Open Market Committee said yesterday in a statement after a two-day meeting in Washington.

Fed Chairman Ben S. Bernanke expanded use of unconventional monetary tools for a second straight meeting after job gains stalled and the government lowered its estimate of second- quarter growth.

Fed officials yesterday said they will replace some bonds in their portfolio with longer-term Treasuries in an effort to further reduce borrowing costs and keep the economy from relapsing into a recession.

Gross domestic product will advance 1.6 percent this year and 2.2 percent in 2012, according to a Bloomberg survey of economists earlier this month.

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