Instant View: Durable goods orders, jobless claims rise

NEW YORK (BestGrowthStock) – The number of U.S. workers who filed initial claims for unemployment benefits rose unexpectedly in the latest week to 496,000, a U.S. Labor Department report showed on Thursday.

New orders for long-lasting U.S. manufactured goods rose more than expected in January as civilian aircraft bookings soared, but slipped excluding transportation, government data showed on Thursday.

KEY POINTS:

DURABLES * The Commerce Department said durable goods orders jumped 3.0 percent, the biggest gain since July, after an upwardly revised 1.9 percent increase in December. * Analysts polled by Reuters forecast orders rising 1.5 percent last month from December’s previously reported 1.0 percent advance. * The surge in orders likely reflected the 59 aircraft bookings received by Boeing in December, which analysts said had not been fully accounted for in the durables report for that month.

JOBLESS * Analysts surveyed before the report had expected jobless claims to fall to 455,000 from 474,000 the week ended February 13, which was previously reported at 473,000. * A Labor Department official said the unexpected large rise could partly reflect a backlog of claims that were unable to be processed in four Mid-Atlantic and New England states because of heavy snowfall.

COMMENTS:

DAVID COARD, DIRECTOR OF FIXED-INCOME SALES AND TRADING,

WILLIAMS CAPITAL GROUP, NEW YORK:

“I’ve been bearish on the economy for quite awhile and have felt that the growth we’ve seen in the third and fourth, and also I’m sure the first quarters, is not sustainable when the government pulls away its assistance programs, and I don’t see anything in the numbers to make me waver from that point of view. There could be some weather factor there, I’m not sure, but the numbers haven’t been trending quite the way some people would have expected. My feeling is that the economy is still on shaky ground, and you couple that with fears on European sovereign debt and it’s not a surprise to see flight to quality.”

MARC PADO, U.S. MARKET STRATEGIST, CANTOR FITZGERALD, SAN

FRANCISCO:

DURABLE GOODS: “This is the problem with the durable goods is that transportation and big orders skewed the number, which is what it did. Take out transportation and we are down 0.6 percent. But that is on top of a very decently revised December, so net-net, not really as bad as it might seem. So the durable goods number was not a plus, but not really a minus, there. We are still kind of trudging along, you do see economic growth in that area, we have seen it in manufacturing, factory orders. So I don’t think just because it was heavily weighted on some transport orders that we should totally dismiss that number. But this is not an economy that is picking up steam by any means, it is just kind of slightly positive, it looks like it is going to stay slightly positive and this number bears that out.”

CARY LEAHEY, ECONOMIST, DECISION ECONOMICS, NEW YORK:

“We’ve had a string of four disappointing economic statistics after a month where the major indicators printed out as expected or better than expected. There was a further backup in initial jobless claims which suggests that now the February payroll employment figures may be worse than January. That would break a nearly solid string of improvements in that series for the last six months.

“The durable goods headline number looked pretty good, but it was dominated by an extraordinarily large increase in civilian aircraft orders. If you look at the core of the report, non-defense capital goods orders excluding aircraft, that’s was down 2.9 percent after large gains in November and December. The trend in capital spending is still up, but it’s still a disappointing report.”

KEITH HEMBRE, CHIEF ECONOMIST, FAF ADVISORS, MINNEAPOLIS:

DURABLE GOODS: “It’s a big effect from aircraft and civil defense orders. There were some upward revisions in December on shipments. The January numbers slipped a bit but they were still above their recent averages. There were some pretty year-over-year increases too. We should have a moderate increase in the capex numbers in first-quarter GDP.”

JOBLESS CLAIMS: “It looks somewhat weather-related. The improvement trend has stalled in the 460,000 to 475,000 range. It’s consistent with net zero hiring. There should be no further decline in unemployment rate. It’s consistent with an economy that’s growing but not at its potential rate.”

STEVE GOLDMAN, MARKET STRATEGIST, WEEDEN & CO., GREENWICH,

CONNECTICUT:

“Durable goods ex transportation was weaker than expected, and jobless claims are a continuation of the (recent) trend.

“It is a sluggish rebound, and I think we’re seeing some concerns of that surfacing for the markets.

“This (data) is not helping the backdrop, where we’ve had a retracement (in stocks).”

CHAD MORGANLANDER, PORTFOLIO MANAGER, STIFEL, NICOLAUS & CO,

FLORHAM PARK, NEW JERSEY:

“We’re continuing to see a short term deterioration. As long as the number is still above 400,000 a week, the U.S. is a net job loser, which will provide a negative bias to equity markets.”

BORIS SCHLOSSBERG, DIRECTOR OF FX RESEARCH, GFT, LONDON:

“The jobless claims data is really ugly. This seems to be the critical sticking point to the whole recovery thesis. Most of the other U.S. economic data has been positive except for jobless claims. Unless we can get that initial claims number closer to 400,000, there will be no jobs creation. The dollar as a result could be vulnerable going forward.”

ZACH PANDL, ECONOMIST, NOMURA SECURITIES INTERNATIONAL, NEW

YORK:

JOBLESS CLAIMS: “You have to be careful with interpreting the data. There has been a lot of unusual weather lately and it was holiday week. But this was fundamentally bad news for the labor market in the near term.”

CHRIS LOW, CHIEF ECONOMIST, FTN FINANCIAL, NEW YORK:

“Flat out disappointing: The orders rise looks good on the surface because it’s up 3 percent but all of the strength is in transportation, which was quite weak in November and December.

“The rise in claims? Two weeks in a row? Surprising increase in jobless claims. We can hope this is a temporary setback but it certainly looks as though in the first quarter it looks like the economy is retrenching.

“The fact that jobless claims have risen so far this year is not encouraging. Since Christmas, when claims were 432,000, they’ve retraced to almost 500,000, which is the same level as mid-November, suggesting the rate of layoffs is pretty close to what it was when the unemployment rate was over 10 percent.”

SUBODH KUMAR, CHIEF INVESTMENT STRATEGIST, SUBODH KUMAR &

ASSOCIATES, TORONTO:

“When you’re close to 500,000 in jobless claims, it shows that job gains will be very slow. Also, in his testimony, Bernanke said that the recovery will be gradual, and the two taken together are bringing the equity markets lower in a correction. The hope was that we’d have a faster recovery.

“The durable goods data was good, and part of Bernanke’s testimony was also good, as when he commented on the business side of the economy. However, that won’t be enough to offset the jobless claims. These numbers show that the correction is still going on.”

MARKET REACTION: STOCKS: U.S. stock index futures add losses BONDS: U.S. Treasury debt prices jump DOLLAR: U.S. dollar extends losses versus yen

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Instant View: Durable goods orders, jobless claims rise