Instant View: Jobless claims fall; NY factories stumble

NEW YORK (BestGrowthStock) – New U.S. claims for unemployment insurance fell more than expected last week to their lowest level in nearly two years as seasonal layoffs eased at factories, government data showed on Thursday.

A gauge of manufacturing in New York State plunged in July by much more than expected as employment worsened, the New York Federal Reserve said in a report on Thursday. The New York Fed’s “Empire State” general business conditions index fell almost 15 points to 5.08 in July from 19.57 in June. July’s reading was the lowest since December, 2009.

U.S. producer prices fell for a third straight month in June, pulled down by weak food and energy costs, according to a government report on Thursday that supported views the Federal Reserve would maintain its low interest rate policy well into 2011.

KEY POINTS:

JOBLESS CLAIMS *Initial claims for state unemployment benefits dropped 29,000 to a seasonally adjusted 429,000 last week, the lowest since late August 2008, the Labor Department said. * Analysts polled by Reuters had expected claims to fall to 450,000 from the previously reported 454,000, which was revised up to 458,000 in Thursday’s report. * The four-week moving average of new jobless claims, considered a better measure of underlying labor market trends, fell 11,750 to 455,250.

EMPIRE * The New York Fed’s “Empire State” general business conditions index fell almost 15 points to 5.08 in July from 19.57 in June. July’s reading was the lowest since December, 2009. * Economists polled by Reuters had expected a July reading of 18.50.

PPI * The Labor Department said the seasonally adjusted index for prices paid at the farm and factory gate dropped 0.5 percent after slipping 0.3 percent in May. * Analysts polled by Reuters had expected producer prices to dip 0.1 percent last month. * In the 12 months to June, producer prices increased 2.8 percent after rising 5.3 percent in May. The year-on-year increase in June was the smallest gain since November and was below market expectations for a 3.1 percent rise.

COMMENTS:

PETER KENNY, MANAGING DIRECTOR, KNIGHT EQUITY MARKETS, JERSEY

CITY, NEW JERSEY:

“This is not a game changer, they will have little to no impact on market direction and will definitely take a back seat to earnings.

“The jobless claims number doesn’t give us any indication that we’re heading in one direction or another, it’s a minor improvement that could likely be given up in the next data announcement.

“These numbers will probably be viewed as a stabilizing influence on the market, it’s basically a status quo number in both the PPI and jobless claims.

“The earnings we’re getting are speaking really to the global growth story, which is very much in play and intact.”

“Our U.S.-centric data, specifically employment numbers, is very domestic and will continue to lag and be very unimpressive because our economy, even in its most robust states of the recovery, is going to be an underperformer.”

PETER BOOCKVAR, EQUITY STRATEGIST, MILLER TABAK + CO, NEW

YORK:

“Initial jobless claims totaled 429,000, below the consensus of 445,000 and the lowest since August ’08 but the influence of seasonal auto shutdowns is having an impact as GM did not close down while others did. Positively, a Labor Dept economist said the decline was not just a GM thing as there were declines in a ‘number of different states.’ Bottom line, due to the seasonal issues around the adjustments with GM doing the opposite of what they’ve historically done has made initial claims more difficult to analyze for a few weeks.”

JOE MANIMBO, SENIOR MARKET ANALYST, TRAVELEX GLOBAL BUSINESS

PAYMENTS, WASHINGTON:

“The data overall is going to add to the dollar’s headwinds, particularly the producer price index, which fell more than expected and as well as the New York area manufacturing survey. The weekly jobless claims fell more than expected, which was encouraging, but I don’t think it’s going to be enough to offset the disappointing news from the other reports. Consequently, we do still have the dollar near session lows. Over the near term, the dollar is likely to continue to struggle if data continues to come out toward the weaker end of expectations. That would tend to add to the dollar’s heavier tone.”

SEAN SIMKO, FIXED-INCOME PORTFOLIO MANAGER, INVESTMENT

MANAGEMENT COMPANY SEI, OAKS, PENNSYLVANIA:

“The move in claims is positive. It is what we need to see. We need to see the number get down closer to 400,000 and below. We are looking for consistent numbers and trends.”

“On Empire State, we did see in the early part of the year the manufacturing sector make some solid gains. I would have expected a two steps forward, one step back scenario.”

KATHY LIEN, DIRECTOR OF CURRENCY RESEARCH, GFT FOREX, NEW

YORK:

“Even though there is an improvement in weekly jobless claims, the pick up in continuing claims as well as the larger than expected drop in PPI and the weaker Empire State Survey makes the first set of U.S. releases dollar bearish. The PPI number confirms the fears of some Fed officials that deflation is creeping into the U.S. economy. The manufacturing sector data is also going to give forex traders further reason to dump the dollar as the risk shifts from Europe to the United States. Overall, U.S. fundamentals are making the U.S. less attractive to investors and reinforcing the idea that investors want to move on from the fiscal problems in Europe. They focus on the good news there and shrug off the bad, but focus on the bad news in the U.S. and shrug off the good.”

MARKET REACTION: STOCKS: U.S. stock index futures cut gains BONDS: U.S. Treasury debt prices trim losses DOLLAR: U.S. dollar falls versus yen

Instant View: Jobless claims fall; NY factories stumble