Economic data

Jan Durable Goods rose twice expectations at the headline level, up by 3% but ex transports they fell by .6% vs an expected gain of 1%. However, ex transports was revised up by 1.1 % pts in Dec, so taken together, it was only a touch light. Leading the headline gain was a 126% rise in nondefense aircraft orders, partly offset by a 2.2% drop in vehicles/parts. The drag on the core was a 9.7% fall in machinery orders. Shipments, which get directly plugged into GDP, fell .2%. The core cap ex figure, non defense capital goods ex aircraft, fell by a disappointing 2.9% but does come after gains in Nov and Dec. Inventories were flat and the inventory to shipment ratio remained unch at 1.67, the lowest since Sept ’08. Bottom line, manufacturing has led the statistical recovery in the economy but today’s data shows how lumpy this process has been and with still a lack of firm end demand evident, lumpiness will likely continue.

In likely weather related noise, Initial Jobless Claims totaled 496k, 36k higher than expected and up from a revised 474k last week. Continuing Claims, delayed by one week, rose just 6k but were 47k above expectations. Extended benefits, reported on a 2 week lag, fell by a net 320k but follow a gain of 275k last week. Bottom line, the snow storms were a definite influence on the reported data likely due to the administrative backlogs that got created, thus don’t read too much into the data. With this said, the trend in initial claims is still too high and while the pace of firings still has slowed dramatically, companies still remain very reluctant to aggressively add workers on a permanent basis.

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