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Jobless Claims in U.S. Jump to Highest Level in Six Weeks

*from, May 16, 2013 (To view original article click here.)

Take Away #1: More Americans than projected filed claims for jobless benefits last week and manufacturing in the Philadelphia region unexpectedly shrank in May, signs the slowdown in growth is rippling through the U.S. economy.

Key Facts and Figures:

  • The number of applications for unemployment insurance payments jumped by 32,000 to 360,000 in the week ended May 11, the most since the end of March, Labor Department figures showed today.
  • The Federal Reserve Bank of Philadelphia’s general economic index fell to minus 5.2 from 1.3 in April.
  • Concern the automatic federal budget cuts that took effect in March will hurt sales may be prompting employers to trim staff and factories to pull back.
  • At the same time, another report showing inflation is retreating as gasoline costs drop means households have extra cash to buy other goods and services, which will help underpin consumer spending.

Take Away #2: Stocks fluctuated between gains and losses as investors weighed the slowdown in growth against expectations that the decrease in inflation will give Federal Reserve policy makers room to keep pumping money into the economy.

Key Facts and Figures:

  • The S&P 500 Index fell less than 0.1% to 1,658.22 at 12:58 p.m. in New York, after closing at a record high 1,658.78 yesterday.
  • The signal was clearer for fixed-income investors as the benchmark 10-year Treasury note jumped, pushing its yield down to 1.87% from 1.94% late yesterday.

Take Away #3: Internationally, reports showed improving economies elsewhere.

Key Facts and Figures:

  • Euro-area exports increased in March for a third month as the currency bloc’s four largest economies all shipped more goods.
  • Japan’s economy expanded last quarter at the fastest pace in a year as consumer spending and exports gained.

Take Away 4: Other reports today showed U.S. consumers are gaining confidence the world’s largest economy will pick up and housing remains a bright spot.

Key Facts and Figures:

  • The monthly Bloomberg consumer economic expectations gauge rose to minus 1 in May, the best reading in five months, from minus 4 in April.
  • The weekly Consumer Comfort Index (COMFCOMF) slipped to minus 30.2 for the period ended May 12 from minus 29.5 the prior week, hovering around a five-year high.
  • Builders pulled back last month after housing starts reached an almost five-year high in March, a surge in permits signals residential construction will soon rebound.
  • Starts (NHSPSTOT) slumped 16.5%, the most since February 2011, to an 853,000 annualized rate from a revised 1.02 million pace in March, figures from the Commerce Department showed.
  • Building permits jumped 14.3% to a 1.02 million annualized rate in April, the highest level since June 2008.
  • “The housing sector has had a bit of a pause recently but the permits data suggests the momentum will resume,” said David Sloan, a senior economist at 4Cast Inc.

Take Away # 5: While housing will probably recover, manufacturing is struggling.

Key Facts and Figures:

  • The drop in the Philadelphia Fed index this month countered expectations of a gain to 2, according to the median forecast of economists surveyed.
  • Readings less than zero signal contraction in the area covering eastern Pennsylvania, southern New Jersey and Delaware.
  • The setback was in line with other reports this week.
  • The Federal Reserve Bank of New York’s general economic index showed manufacturing unexpectedly shrank in the New York, northern New Jersey and southern Connecticut region.
  • Figures from the Fed in Washington yesterday indicated output at factories, mines and utilities declined in April by the most in eight months, reflecting broad-based cutbacks.
  • The slowdown in growth may be making it tougher for companies to boost prices.

Take Away # 6: The cost of living fell in April for a second month, the first back-to-back declines since late 2008, according to figures from the Labor Department.

Key Facts and Figures:

  • The consumer-price index decreased 0.4, the biggest decline since December 2008, after falling 0.2% in March.
  • Economists surveyed by Bloomberg projected a 0.3% drop, according to the median estimate.
  • The so-called core price measure, which excludes more volatile food and energy costs, increased 0.1%, less than projected.

Take Away # 7: The increase in jobless claims last week exceeded all forecasts of 50 economists surveyed by Bloomberg.

Key Facts and Figures:

  • The median projection called for a rise to 330,000.
  • Estimates ranged from 315,000 to 355,000.
  • The Labor Department revised the previous week’s figure to 328,000 from an initially reported 323,000.
  • “It’s possible that we could get a little bit more firing as the economy slows in the second quarter,” said Gennadiy Goldberg, a U.S. strategist at TD Securities Inc. in New York.
  • “Volatility aside, the layoff part of the equation still looks positive. It looks more like employers aren’t very keen to fire workers but they are keen to reduce hours,” said Goldberg.
  • Procter & Gamble Co. (PG), the Cincinnati-based maker of Gillette razors and Tide detergent, is among companies paring headcount.
  • As of the end of March, P&G had reduced 6,250 positions, CFO Jon Moeller said on an earnings call on April 24.
  • That’s ahead of its target under a previously-announced cost-cutting plan that called for a reduction in non-manufacturing staffing of 10%, or about 5,700, by the end of the fiscal year that ends June 30, he said.
  • The economy may cool to a 1.6% pace this quarter, after growing at a 2.5% rate in the first three months of 2013, according to the median forecast in a Bloomberg survey of economists from May 3 to May 8.
  • The projection reflects the lagged effect from a two percentage-point rise in the payroll tax at the start of 2013 and $85 billion in automatic budget cuts that began on March 1.

Take Away # 8: For now, consumers are holding up as lower fuel costs combined with rising stock and home values boost buying power.

Key Facts and Figures:

  • Sales at retailers unexpectedly advanced in April, rising 0.1 percent after a decrease of 0.5% in March, a report showed earlier this week.

*To view original article from click here.

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