Economic data

Initial Jobless Claims totaled 484k, a large 44k above expectations and up from 460k last week. Again though, a Labor Dept official is saying there are lag effects from the Easter and Cesar Chavez holiday in California so I don’t know what’s real and what’s administratively distorted. Continuing Claims, which stretch to 26 weeks, rose by 73k and were 59k above expectations. Extended benefits rose a net 162k and the absolute level of those still collecting benefits remain very elevated. Bottom line, while we can’t read too much into the rise in initial claims data over the past 2 weeks because of the difficult seasonal adjustments around this time, the extended benefit data still shows a muted hiring environment but hopefully on the cusp of getting better as the economy does.

The April NY manufacturing survey, the 1st April industrial # out, was a solid 31.9, almost 8 pts above expectations and up from 22.9 in March. It’s at the highest level since Oct ’09 and just shy of the highest since March ’06. New Orders rose to 29.5 from 25.4 but Backlogs fell to -3.8 from +4.9. The Employment component rose 8 pts to 20.3, the highest level since March ’06. Inventories also got built as this component rose to 11.4 from 4.9, the most since this question was asked in July ’01. Prices Paid spiked to 41.8 from 29.7 to the highest since Sept ’08 but mfr’s couldn’t pass it on as Prices Received fell to 6.3 from 8.6. The 6 month outlook on Business Conditions rose a touch to 55.7, 2 pts but is below the recent high in Nov ’09. Bottom line, manufacturing is the key source of strength in this recovery and today’s figure confirms that.

Foreign purchases of US assets in Feb totaled $47.1b, $17.4b above expectations and up from a revised $10.2b in Jan. Treasury purchases totaled $48.1b but our biggest holder, China, again cut its exposure by $11.5b and has been a net seller for a 4th straight month. Japan, the 2nd biggest holder did buy a net $3.1b. Foreign purchases of Gov’t agency paper rose $2.4b. Foreigners bought $12.9b of US stocks but sold $12b of corporate bonds and have been sellers for the 10th month in the last 11. US investors bought a net $4.2b of foreign stocks and bonds. Bottom line, because the data is somewhat dated it does not have an influence on the US$ but the treasury data and holders of it is interesting to keep an eye on.

March Industrial Production was surprisingly weak, rising only .1% vs expectations of a .7% gain, partially offset by a .2% upward revision to Feb. There is a big but though within the data as the utilities output category fell by 6.4%, as the weather was likely a culprit, weighing on the overall figure. IP elsewhere was good as production of motor vehicle/parts rose 2.2% and is now up 24.3% y/o/y vs the easy comparison. Machinery production was up 1.2%, computer/electronics rose by 2% and mining jumped 2.3%. Capacity Utilization did rise to 73.2% from 73% and now is at the highest level since Nov ’08 but remains well below the long term average of 80% and is a key data point feeding the Fed’s large output gap thesis in keeping inflation low.

The Philly Fed survey was about in line with estimates at 20.2 vs 18.9 in Mar. The recent high was 22.5 back in Dec and the low in the late ’08 panic was -38.8 so we’ve obviously come a long way. New Orders rose 4.6 pts to 13.9 but is below the spike level of 22.7 back in Feb and Shipments, which follow orders, fell by 8 pts to the lowest since Sept ’09. Backlogs remained negative for a 3rd month but rose 4 pts. Inventories rose for the 2nd month in the past 3. Employment was positive for a 5th straight month but fell 1.1 pts to 7.3. Similar to the NY survey, Prices Paid rose 4.1 pts to 42.7, the highest since Aug’ 08. Prices Received rose 1.4 pts to +1 but not enough to offset the rise in prices paid. The Business outlook 6 months out fell almost 8 pts to 44.2 but is the 2nd highest figure dating back to Sept ’09. Bottom line, as I said with the NY #, manufacturing remains the key source of strength in this recovery and today’s data confirms that.