More Data Analysis

March 17th, 2016 9:55 am | by John Jansen |

Via Stephen Stanley at Amherst Pierpont Securities:

Initial unemployment claims rebounded by 7,000 to 265,000 in the week ended March 12.  The noise around the spring break filers in NY a few weeks ago inflated the 277K figure two weeks ago and depressed last week’s 258K reading.  The average of those two weeks is 267.5K, which is not much different from this morning’s 265K print (which should be clean) or the four-week moving average of 268K.  Any way you slice it, the number of new filers seems to be running at a pace somewhere around 265K to 270K, ever so slightly lower than the 273K average in the second half of last year (which was already indicative of a historically low pace of layoffs).  It is hard to believe that the labor market could strengthen even further, but the claims data would suggest that it may have.

Meanwhile, the Philadelphia Fed regional manufacturing survey results point to a noticeable uptick in March.  The headline gauge jumped from  -2.8 to +12.4, the best reading in over a year.  Key measures of activity were also higher, as the new orders index surged 21 points to +15.7 and the shipments measure jumped almost 20 points to +22.1 (the employment barometer improved somewhat but remained slightly negative).  The Empire State regional factory index showed similar improvement in March as well.  I am generally not a big fan of these regional factory indicators, as there are so darn many of them and their correlations with the national ISM measure are spotty.  Nonetheless, the Fed’s factory output data, released yesterday, showed back-to-back gains, the ISM composite crept higher in February (still below 50), and durable goods orders in January rebounded after weak November and December results.  So, the evidence is piling up that the manufacturing sector’s worst days are probably behind it, and the regional gauges this week are downright hopeful.  I doubt that we will see much growth in the factory sector in 2016, but it may very well cease to be an outright drag, as the most intense period of dollar appreciation is now more than 18 months in the past, so that the headwinds from the strong dollar are probably beginning to fade.

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