October 25, 2012
Today's Economic Reports Bring A Sigh Of Relief
Today's updates on jobless claims and durable goods orders bring good news, or at least good relative to the worst fears inspired by recent data points in these series. There's still plenty to worry about and it's premature to conclude that we've pulled out of the bog with these statistics. But if you're looking for fresh evidence that the economy is crumbling, you won't find it in the numbers du jour.
Let's start with durable goods orders, which rebounded in September, reversing the steep decline posted in August, the Census Bureau reports. Last month's 9.9% rise is the highest monthly increase since January 2010, although most of the surge was due to the volatile transport sector. Still, durable goods orders ex-transport rose 2.0% last, suggesting that demand generally improved in September.
One exception is the market for capital goods, which continues to show signs of stagnating. New orders for durable goods ex aircraft and defense—business investment—was flat last month, which implies that corporate America remains skittish on the outlook for the economy.
The good news is that durable goods orders generally perked up last month on a year-over-year basis. It may be noise, but new orders rose 2.5% in September vs. the same time a year ago. That's encouraging after August's 6.7% drop on an annual basis—the first red ink by this benchmark in more than two years.
The jury's out if the relatively favorable trend via September's durable goods numbers will roll on in October. What we do know is that September's overall profile for the economy looks modestly encouraging, as I discussed last week. Today's durable goods report adds more positive shine to that reading.
So too does the latest update on jobless claims, which fell 23,000 last week to a seasonally adjusted 369,000 through October 20. And just in time!
As noted in last week's update, the sharp rise in new filings for unemployment benefits for the week through October 13 looked ominous. As usual, I reminded that this is a volatile series and so any one number should be taken with a grain of salt. Today's update is no less shaky on that front, although the fact that new claims didn't continue rising is encouraging just the same.
More importantly, the year-over-year change in raw claims data as of last week returned to its long-running trend of dropping roughly 10% a year. That's a clue that the labor market continues to heal, albeit slowly.
The outlook would be quite a bit darker today if the annual pace in new claims increased, as it did for the week through October 13. But that surge now looks like a one-time event, although it'll take a few more weeks of data updates to be sure.
For now, it looks like we dodged another bullet. Based on the numbers in hand, the economy overall continues to grow, or so the September reports tell us. Confidence is low, however, for thinking about what comes next, starting with the arrival of the early October data releases next week.
Posted by jp at October 25, 2012 10:19 AM