In the week ending the 10th of March, US initial jobless claims dropped from an upwardly revised 365 000 to 351 000, while only a slight decline to 357 000 was expected. The less volatile four-week moving average stayed unchanged at 355 750. The claims are at exactly the same level as in the second week of February, which was the lowest level since April 2008. We believe that the uptick in the first week of March was probably still due to distortions after the President’s Day Holiday. The Labour Department added that there was nothing unusual in the claims data. Continuing claims, which are reported with an extra week lag, dropped to the lowest level since August 2008. In the week ending March the 3rd, continuing claims dropped from an upwardly revised 3 424 000 to 3 343 000. It is an encouraging sign that the uptick in the previous two weeks was only temporary and that claims are now again at the lows seen in February, which suggest that labour market conditions remain strong in March.
The NY Empire State manufacturing index rose unexpectedly in March. The NY Fed index increased slightly, from 19.53 to 20.21, while a correction to 17.50 was expected. The details are however more mixed. Growth in new orders (6.84 from 9.73) and shipments (18.21 from 22.79) eased somewhat, while the price trends are worrying. Priced paid jumped from 25.88 to 50.62, while prices received dropped slightly, from 15.29 to 13.58, suggesting that firms are unable to pass trough the increased costs. Number of employees (13.58 from 11.76) and average workweek (18.53 from 7.06) picked up and also delivery time (7.41 from 1.18), inventories (0.00 from -4.71) and unfilled orders (-1.23 from -7.06) improved in March. While the headline figure is encouraging, suggesting that the recovery in the manufacturing sector remains on track, the underlying picture is more mixed, pointing to some risk factors.
In March, the Philadelphia Fed manufacturing index rose for a fourth consecutive month, reaching its highest level since April last year. The headline index rose from 10.2 to 12.5, marginally stronger than expected (12.0). Also in the Philadelphia Fed index, the breakdown is more mixed. New orders (3.3 from 11.7), shipments (3.5 from 15.0), unfilled orders (-11 from 2.2), delivery time (-7.1 from 1.5) and average workweek (2.7 from 10.1) fell sharply back, while only inventories (0.9 from -12.9) and number of employees (6.8 from 1.1) picked up. Prices paid eased from 38.7 to 18.7 and prices received eased from 15.0 to 8.4. The headline figure looks strong, but the details are not at all, as new orders and shipments posted the weakest readings since the summer of last year, which raised fears that the momentum might be slowing.