In the week ended the 14th of July, US initial jobless claims edged up again. Initial claims rose by 34 000, from an upwardly revised 352 000 to 386 000, while an increase to 365 000 was forecast. In the previous week, initial jobless claims dropped sharply, to its lowest level since early 2008. The Labour Department added that claims are experiencing volatility due to differences in timing of auto layoffs that normally occur during this time of the year. As the figures are distorted by seasonal adjustment factors, we shouldn’t draw strong conclusions from it. The less volatile four-week moving average dropped from 377 000 to 375 500.
Continuing claims, which are reported with an extra week lag, surprised on the upside of expectations, rising from 3 313 000 to 3 134 000, while the consensus was looking for a decline to 3 300 000. For the first time in four months, the Philadelphia Fed index increased in July. The headline index rose from -16.6 to -12.9 after falling sharply in the previous two months. The rebound was somewhat disappointing, as the consensus was looking for a stronger recovery, to -8.0. The details show a pick-up in new orders (-6.9 from -18.8), shipments (-8.6 from -16.6) and unfilled orders (-9.5 from - 16.3), while number of employees worsened significantly (from 1.8 to -8.4).
Delivery time (-15.7 from -15.5), inventories (-7.5 from -8.7) and average workweek (-17.3 from -19.1), stayed broadly unchanged from the previous month but remain in severe contraction. Prices paid increased from -2.8 to 3.7 and prices received rose from -6.9 to 1.6. The forward looking index (six months from now) remained broadly unchanged from the previous month at 19.3 (from 19.5). Overall, the Philly Fed index shows some improvement from the previous month, both in the headline figure and the details, but the index remains in serious contraction, raising expectations that last month’s sharp decline in the manufacturing ISM was no outlier. After a strong start of the year, manufacturing activity in the US is seriously slowing and might even be stalling.