In the week ended the 14th of April, US initial jobless claims surprised again on the upside of expectations. Initial claims dropped from an upwardly revised 388 000 to 386 000, while the consensus was looking for a decline to 370 000. The less volatile four-week moving average edged up, rising from 369 250 to 374 750. This is already the second consecutive upward surprise, which might be (partially) due to the long Easter weekend, but causes some nervousness, especially after the disappointing payrolls report. This time, also continuing claims surprised on the upside, after they fell to a multi-year low in the week before. In the week ended the 7th of April, continuing claims rose by 26 000 to 3 297 000, still marginally below the consensus, which was looking for an increase to 3 300 000. The claims remain disappointing, although some of the volatility might be due to the long Easter weekend. We hope to see the claims trending slightly lower in the coming weeks, even though this might only go slowly.
In April, the Philadelphia Fed manufacturing index dropped for the first time in five months. The headline index fell from 12.5 to 8.5, well below the market consensus which was looking for only a marginal decline (to 12.0). The details are more mixed as the new orders (2.7 from 3.3) and shipments (2.8 from 3.5) indices fell only slightly, after significant declines in March. Average workweek (- 2.3 from 2.7) fell more significantly, but unfilled orders (3.2 from -11.0), delivery time (-3.4 from -7.1) and inventories (8.2 from 0.9) picked up this month. Even more impressive was the sharp increase in number of employees (from 6.8 to 17.9). Upward price pressures accelerated with prices paid rising from 18.7 to 22.5, while prices received increased from 8.4 to 9.4. While the headline figure is disappointing, the details are less so, but the details weakened sharply in the previous month. The two months taken together, we should concluded that the strong momentum, seen in the first months of the year, seems to have slowed somewhat.