Instant View: Durables up slightly in Dec; jobless claims fall

NEW YORK (BestGrowthStock) – New orders for long-lasting U.S. manufactured goods increased less than expected in December, restrained by an unexpected drop in civilian aircraft bookings, while jobless claims fell last week.

KEY POINTS: * The Commerce Department said durable goods orders rose 0.3 percent after a 0.4 percent decline in November, which had been reported as a 0.7 percent drop in the government’s most recent report. * The government this month revised down factory and durable goods orders data for November, citing a processing error. Analysts polled by Reuters forecast orders rising 2 percent last month on the basis of 59 aircraft orders received by Boeing, up from only nine in November. * The report showed non-defense aircraft and parts orders tumbled 38.2 percent last month after a 40.0 percent drop the month before. Defense aircraft orders rose 14.7 percent after a 10.4 percent fall in November.

JOBLESS CLAIMS: The number of U.S. workers filing new applications for unemployment insurance fell last week in a sign of stronger labor market conditions, but the drop was less than expected, government data showed on Thursday.

Story: [ID:nN28241916] Table: [ID:nOAT004458]

KEY POINTS: * Initial claims for state unemployment benefits dropped 8,000 to a seasonally adjusted 470,000 in the week ended January 23, after rising for three weeks in a row, the Labor Department said in a report. * Economists polled by Reuters had forecast claims dipping to 450,000 from a previously reported 482,000.

COMMENTS:

DAVID SLOAN, ECONOMIST, 4CAST LTD, NEW YORK:

“The durables overall was quite encouraging. The headline was disappointing because the Boeing orders that people expected to give a lift to aircraft did not happen — presumably those orders will show up eventually in the figures. The ex-transport numbers were pretty good and the figures on business investment were pretty good. Non-defense, ex-aircraft was up pretty healthily for the second straight month. So, overall the durables numbers are quite good.

“The initial claims are in line with our expectations but they disappointed the market. The trend in initial claims is falling but we had some sharp falls in the Christmas and New Year’s holiday week and I think it is clear that those numbers were a bit misleading.”

LINDSAY PIEGZA, ECONOMIST, FTN FINANCIAL, NEW YORK

“We have to break (business spending) down to capital goods, ex-defense, ex-aircraft….that’s actually much better than the headline number. We are seeing some business expenditures despite the very weak headline number, transportation down 2 percent but that’s pretty much as expected. Actually, business spending is recovering quite nicely compared to that October low. We’re down just about 1 percent on an annualized basis and that’s much better than anticipated so this is actually a much better report than the headline had shown.

“Jobless claims revised up. We’re still seeing weekly volatility in terms of jobless numbers but what we are seeing is a steady improvement in that four-week average.

“This morning’s numbers are not too bad. Part of the reason that the market’s going to be reacting is last night’s speech (by President Obama). There was expectations for Obama to move to the center but he very much stayed to the left. Instead of focusing on jobs and the economy a lot of the rhetoric was continuing to focus on healthcare and climate change. What we were really looking for was moderate rhetoric and instead he continued to stay the course and go with the most liberal policies.”

JAMIE COX, MANAGING PARTNER, HARRIS FINANCIAL GROUP, COLONIAL

HEIGHTS, VIRGINIA:

“The claims data is pretty much in line. I don’t see any meaningful improvement in the unemployment picture right now.

“Unemployment is going to stay high. This is where we are going to live for a while.

“I think durables is a good report. This is not normally a robust period for durable goods. It (the report) tells me the inventory rebuild is still in full force.”

ALAN GAYLE, SENIOR INVESTMENT STRATEGIST, RIDGEWORTH

INVESTMENTS, RICHMOND, VIRGINIA:

“I think the jobless claims number were disappointing and suggest that the job market is still struggling. However, it is encouraging that orders were up. To me, that reflects a continued return to normalization in production levels, which will be a positive for growth during the first quarter.”

OMER ESINER, SENIOR MARKET ANALYST; TRAVELEX GLOBAL BUSINESS

PAYMENTS, WASHINGTON:

“The fact that weekly jobless claims came in well above market expectations is initially undermining the dollar against the yen in particular. Durable goods coming in cooler than expected but this is a notoriously volatile indicator so that leaves me to believe the markets is little disappointed in the lack of improvement in labor market conditions.”

MARKET REACTION: STOCKS: U.S. stock index futures reduced gains. BONDS: U.S. Treasury debt prices pared losses. DOLLAR: U.S. dollar pulled back against the yen.

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Instant View: Durables up slightly in Dec; jobless claims fall