
United States
Initial jobless claims totaled 222k, 18k less than expected and down from 244k last week. Go back to 1973 the last time we saw a claims figure this low. I’m taking this quote from the DJ story which quoted an economist at the Labor Department, “Many applying for unemployment benefits in Puerto Rico and the US Virgin Islands…must submit paper applications because power outages and infrastructure damage are disrupting the electronic process. This has slowed what would likely be an influx of unemployment applications to a trickle.” Unfortunately, expect a pick up in claims from California in coming weeks. They grew by 4,500 as of October 7th. Continuing claims, delayed by a week, fell by 16k to the lowest since late 1973. Bottom line, separating out the aftermath of the hurricanes and the wildfires has the pace of firing’s still very modest.
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After the upside seen in the NY manufacturing index (but with key internals that fell), the October Philly index rose to 27.9 from 23.8 and that was 6 pts more than expected. Similar to NY, key internals here dropped too m/o/m. New orders fell by 10 pts to 19.6 after rising by 9 pts last month. Backlogs declined 6 pts to 10.9 and is back below its 6 month average. Shipments fell by 13.4 pts. Inventories went positive after 2 months below zero. The real bright spot was in employment where this component spiked to 30.6 from 6.6 and the workweek was up by 7.5 pts. That employment figure is the highest on record in this survey that goes back to 1968. As for pricing, prices paid rose to a 7 month high but prices received fell by 8.6 pts after jumping by almost 10 pts in September.
As for the outlook, business activity expectations dropped by almost 9 pts but after rising by 13 pts last month. Capital spending plans fell by 1.3 pts m/o/m.
Bottom line, October is off to a great start if we just look at the headline NY and Philly manufacturing indices but it’s much more a mixed bag when looking underneath the hood. I can’t begin to explain the employment spike in the Philly number. As seen in this chart, it tends to have sharp moves both up and down.
PHILADELPHIA EMPLOYMENT COMPONENT