Jobless Claims, Also, trim those Q2 estimates

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United States

Initial jobless claims rose 1k to 234k, 4k below expectations and continues a string of low figures. Because a 257k print 5 weeks ago dropped out of the 4 week average, it fell to 235k from 241k last week. That level was last seen in 1973. Continuing claims, delayed by a week, rose 24k off the lowest level since 2000. The bottom line remains the same bottom line in that the pace of firing’s remain modest because employers know it’s tough to find qualified employees at this stage of the economic cycle and at the same time are hopeful that Trumponomics (whenever we might see its benefits) will lead to an acceleration of growth.

In a precursor to the April trade deficit release in a few weeks ago, today we saw the advance look at the goods trade balance. It widened $3.1b more than expected to $67.6b. That is the 2^nd highest level since early 2015. Exports fell .9% m/o/m to the lowest level since November predominantly due to a 7.5% fall in auto exports. Consumer goods exports were lower by 4.1%. Imports did rise .7% but reflecting peak auto’s, auto imports fell 2.4% m/o/m. Bottom line, we might see a trim in Q2 GDP estimates on the heels of the export drop.

After a major Q1 GDP drag from inventories, I expected a pick up in Q2 but it didn’t happen yet in April at the wholesale and retail level. Wholesale inventories fell .3% m/o/m, well worse than the estimate of up .2% and both durable and non durable goods inventories were down. Retail inventories fell .3% m/o/m but are still up 3% y/o/y with autos still a problem. Vehicle inventory on dealer lots fell .5% m/o/m but are still up a problematic 6.7% y/o/y. The aftermath of a top in auto sales is only just beginning in terms of manufacturing, sales, and delinquencies.

Bottom line, following a likely Q2 GDP estimate trim after the goods data, it will be sliced again after this inventory figure.