Initial Claims Report Suggests a Much Weaker Labor Sector
The initial claims data weakened for the week ending Feb. 20 as the claims figure increased from 474,000 to 496,000. The consensus expected claims to decline to 460,000. Many analysts, including us, believed that inclement weather conditions across the U.S. would prevent many workers from filing new claims. If this scenario is true, then the actual initial claims figure would be much closer to 550,000... Continuing claims rose a modest 6,000 to 4.617 mln for the week ending Feb. 13. The figure for the week ending Feb. 6 was revised up from 4.570 mln, and the consensus expected claims to remain at that previous level. The decline in original claims is mostly due to workers running out of benefits and it seems the weather made it difficult to process extended benefit applications.
Durable Goods Orders Headline Data Deceiving
Durable goods orders rose 3.0% in January after increasing 1.9% in December. The consensus expected a more modest 1.5% gain. The headline data is very misleading. Transportation orders jumped 15.6% in January on the back of a 126% increase in orders for nondefense aircraft. Strangely, even though auto assemblies rocketed higher in January, motor vehicle orders fell 2.2%. The drop may correspond with higher motor vehicle inventories in the coming months. Excluding transportation, orders slipped 0.6% after increasing 2.0% in December. The consensus estimate called for a 1.0% increase. After a strong Q4 2009, growth in business investment seems to have slowed. Orders for nondefense capital goods excluding aircraft fell 2.9% after increasing roughly 3.3% in both November and December.
China's banks in cash-call rush to lift balance sheets
FT reports China's state-controlled banks are rushing to raise money from public markets to shore up their balance sheets after a year of unprecedented loan growth and the introduction of stricter capital requirements by regulators. This week alone, Chinese lenders have announced plans to raise up to 76 bln through equity and bond sales, with at least 150 bln of bank fundraising in the pipeline, analysts say. The cash calls come as Beijing tries to limit new lending to the white-hot property market and the investment vehicles of local governments.
Latest truck tonnage reading indicates economic recovery
Truckline reports the American Trucking Associations’ advance seasonally adjusted For-Hire Truck Tonnage Index jumped 3.1% in January, following a revised 1.3% increase in December 2009. Compared with January 2009, SA tonnage surged 5.7% which was the best year-over-year reading since January 2005 and the second consecutive increase. ATA Chief Economist Bob Costello said that the latest tonnage reading, coupled with anecdotal reports from carriers, indicates that both the industry and the economy are clearly in recovery mode, although at a slow pace.
