U.S. Initial Claims for Unemployment Insurance Drop

Initial claims for unemployment insurance fell further last week to 317,000 from 330,000 during the week prior. It was third consecutive weekly decline and to the lowest level since early last month. The prior week's level was revised up.

The four week moving average of initial claims rose slightly again to 329,750 (4.8% y/y), the highest level since April.There were no special factors indicated as having influenced the figures beyond a slight increase due to wildfires in California.

A claims level below 400,000 typically has been associated with growth in nonfarm payrolls. During the last six years there has been a (negative) 78% correlation between the level of initial claims and the m/m change in nonfarm payroll employment.

Continuing claims for unemployment insurance fell a slight 4,000 after the 60,000 spike upward during the prior week. It was revised down slightly.

The continuing claims numbers lag the initial claims figures by one week.

The insured rate of unemployment was stable at 1.9% with a downwardly level during the week prior.

By state and versus one year ago, large declines in initial claims were logged in Indiana, Kentucky, New York, Michigan, Missouri, Virginia and South Carolina. Large y/y increases were in Pennsylvania, Ohio, California, Maryland, Texas, Florida and Arizona.

This morning's JEC testimony by Federal Reserve Board Chairman Ben S. Bernanke, The Economic Outlook, is available here.

Yesterday's presentation, The End of History, by Fed GovernorKevin Warsh to the New York Association for Business Economics can be found here.

Japan’s machinery orders do show some improvement in the pattern for sequential growth rates for core orders. That series omits the most volatile components of the orders series. Still the current readings remain negative (m/m 3-mo, 6-mo and Y/Y). Foreign demand for the overall orders series is oscillating at a moderate reading up by 4.8% over three months and down by 7.8% in September, after a strong August. Domestic demand, however, shows still weak trends with a dive in the Yr/Yr growth rate in September.

The economy watcher’s index is dropping rapidly and so is the future index. Each of them is at a relative low point in its five year range in the low 40^th percentile of it. The weakness in these survey indexes is set in the table against the NTC survey of manufacturing sentiment. MFG sentiment is even weaker, residing in the bottom 15 percentile of its range. Clearly Japan is having some difficulty with growth. Both the anecdotal economy watchers survey and the more grounded NTC survey of manufacturers show fading growth and very low current activity readings.

Imports fell by a sharp 2.6% as exports headed higher by 0.7% expanding the German trade surplus. Trends show that exports are still up strongly while imports are lagging with a 12.3% 3-month export growth rate matched against a 0.5% pace for imports for that same period. Over 6 and 12 months export growth continues to outdo imports. Note that the detailed growth rates in the table are executed from one month older data due to lagging observation availability. Germany may seem to be escaping an adverse impact on GDP by seeing its trade surplus widen but since the escape is due to weak imports, which may themselves reflect a weakening economy, it is too soon to make that judgment.