Friday, 6 January 2006

Low US jobless claims and strong services indices but other data mixed

Yesterday, Reuters reported some good economic data from the US:

In its weekly report, the Labor Department said 291,000 initial claims for state jobless benefits were filed last week, the lowest since September 2000 and down from a revised 326,000 in the prior week. It was the largest weekly drop since late September...

The larger-than-expected drop brought a four-week moving average of initial claims, which smooths weekly volatility to provide a better view of underlying labor market trends, down by 9,250 to 316,750, its lowest level since August...

A separate report from the Institute for Supply Management showed the U.S. services industry expanded further in December, thanks to lower energy costs, rising new orders and continued job growth.

ISM said its non-manufacturing index rose to 59.8, from 58.5 in November, above forecasts for a rise to 59.0... The employment component edged up to 57.1 in December from 57.0, while the prices-paid gauge fell to 69.5 from 74.2.

...as well as some not-so-good data:

In other data, major U.S. retailers on Thursday reported that deep discounts lured holiday shoppers last month and pushed sales slightly ahead of expectations...

[But] Wal-Mart, the world's biggest retailer, said its fourth-quarter profit would likely reach only the low end of its forecast after a weak December. Wal-Mart posted just a 2.2 percent increase in December sales at U.S. stores open at least a year...

In a separate report on Thursday, the employment consulting firm Challenger, Gray & Christmas Inc said planned U.S. layoffs rose 8.6 percent in December, pushing the 2005 annual total of job cuts 3.1 percent higher than in 2004.

The National Association of Realtors said its Pending Home Sales Index, based on contracts signed in December, fell to 120.6 in November, down 2.5 percent from both October and a year ago and its lowest reading since January 2005.

Reuters also reported that the rest of the world saw more upbeat news.

In Europe, the euro zone Purchasing Managers' Index for the services sector surprised financial markets by rising to 56.8 in December from 55.2 in November, well above the 50 divide between growth and expansion and its highest level since January 2004.

The UK service sector survey was also unexpectedly strong, with the main index rising to 57.9 in December from 55.8.

In Japan the Reuters Tankan, a monthly survey of major companies, showed manufacturers' business confidence rose strongly in December to an index level of plus 32, the highest since the survey started in June 1998. Non-manufacturing confidence held steady.

Bloomberg reported much of the same good news plus the following:

A gauge of consumer sentiment showed consumers were the least pessimistic in more than three years, rising to minus 11 from minus 13, the European Commission said today in Brussels. German factory orders rose 1.7 percent in November...

The commission's measure of confidence among businesses rose to minus five from minus seven, the best since January, and its index of retail sentiment increased to minus four from minus six. Employment expectations among manufacturers and consumers were the highest since 2000.

...as well as some not-so-good news:

The commission today said a gauge of confidence among service companies dropped to 13 from 14 and its barometer for constructions firms dropped to minus three from minus one.

German retail sales also unexpectedly fell in November as plans by Chancellor Angela Merkel to raise value-added tax hurt consumer sentiment. Sales, adjusted for inflation and seasonal swings, dropped 1 percent from October, the Federal Statistics Office in Wiesbaden said today.

Retail sales for November were a little more mixed in the wider region, falling 0.1 percent in the euro-zone but rising 0.4 percent in the EU25, according to Eurostat.

Eurostat also reported similarly mixed trends for producer prices in November, falling 0.2 percent from the previous month in the euro-zone but rising 0.5 percent in the EU25. On Wednesday, it had reported a flash estimate of 2.2 percent inflation rate in December for the euro-zone, slightly down from the 2.3 percent in November.

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