Jobless Claims, Productivity and Trichet

Initial Jobless Claims totaled 457k, 23k below expectations, down from 462k last week and at the lowest since Sept ’08. However, Continuing Claims rose 28k, Emergency Unemployment Compensation rose by a large 265k and Extended Benefits rose by 58k. Thus, the amount of those filing initially continues to moderate but the rest of the claims data is still showing evidence that people are still having difficulty finding new jobs. The hope of course is that the continued slowdown in firings will much sooner rather than later lead to hiring. Q3 Productivity was revised to a gain of 8.1%, down from 9.5% initially and .4% below expectations and as a result unit labor costs fell by 2.5%, down from an initial report of a fall of 5.2%.

In his post rate announcement press conference, Trichet said that the current interest rate level of 1% “remains appropriate” in light of expectations of moderate euro area economic growth in 2010 “recognizing that the recovery process is likely to be uneven and that the outlook remains subject to high uncertainty.” They also believe that medium to longer term “inflation expectations remain firmly anchored” in line with their target rate of 2%. With respect to their lending facilities, they said that “not all our liquidity measures are needed to the same extent as in the past.” They said their last 12 month refinancing operation will be on Dec 16th, as expected, priced at the average minimum bid rate instead of at 1%. The last 6 month operation will be on Mar 31st ’10. Trichet is also talking up the US$ but just as he has over the past few months.

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