Initial jobless claims fell 22k w/o/w to 242k and that was 9k below expectations. As a similar amount fell out of the 4 week average, it remained little changed at 244k vs 245k last week. Continuing Claims fell by 8k to just under 1.8mm at 1.799mm.
Bottom line, while the initial claims figure was below the estimate, thanks to last week’s print, the 4 week average is around the highest since last November. Continuing claims continue to hover around the highest since December 2021. The labor market is showing signs of fraying but be sure that those businesses that had a really hard time finding workers over the last few years will be slow in shedding them, mostly blue collar workers. The white collar side though is much more vulnerable to job cuts and we’ve certainly seen that so far in tech.
4 Week Avg in Initial Claims
Continuing Claims
The May Philly manufacturing index was negative for the 11th month in the past 12 at -10.4 though that is up from-31.3 in April and above the estimate of -20.
New orders stayed below zero too but less so at -8.9. Backlogs got back to the plus side at .8 after a long string of negative prints. Employment fell to -8.6 and is less than zero for a 3rd straight month. The workweek is now negative for a 4th straight month. Delivery times were negative still. prices paid rose slightly but after falling by 15 pts last month. Those received were -7 and below zero for a 2nd month.
Negatively too, the 6 month outlook weakened further to -10.3 and in contraction for a 3rd straight month. Capital spending plans did lift back above zero at 2.5 after two months below. Expectations for both prices paid and received did jump with both at 5 month highs.
Bottom line, this data point follows the deeply negative NY survey and likely confirms that the manufacturing recession continued on in May.
Philly Mfr’g
Lorie Logan, the Dallas Fed president who does vote just said this, “The data in coming weeks could yet show that it is appropriate to skip a meeting. As of today, though, we aren’t there yet.”
The incoming Vice Chair Philip Jefferson sounded more non-committal on whether to hike or not in June. He talked about the ‘long and variable lags’ but also said “Inflation is too high, and we have not yet made sufficient progress on reducing it.”
The 2 yr yield at 4.23% is now up 24 bps this week.
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