U.S. Weekly Initial Claims ForUnemployment Insurance Retrace Prior Declines

The Labor Department indicated that recent job market improvement stalled last week as suggested by a moderate rise in initial claims for unemployment insurance. The rise to 474,000 from an unrevised 457,000 retraced much of the prior two weeks' decline. Nevertheless, claims remained near the 15-month low, down from the recession peak of 674,000 claims reached in March. The four-week moving average of claims fell to 473,750 and the latest weekly figure was higher than Consensus expectations for an increase to 460,000 claims.

Extended benefits for unemployment insurance fell sharply w/w to 407,455 during the third week of November. The latest was versus 550,343 during all of October.· The insured rate of unemployment fell t0 3.9%, the lowest level since February. The rate reached a high of 5.2% during late-June. During the last ten years, there has been a 93% correlation between the level of the insured unemployment rate and the overall rate of unemployment published by the Bureau of Labor Statistics.

The highest insured unemployment rates in the week ending November 21 were in Puerto Rico (6.1%), Oregon (5.6), Alaska (5.5), Nevada (5.1), Wisconsin (4.9), Pennsylvania (4.8), Michigan (4.7), California (4.4) and South Carolina (4.3). The lowest insured unemployment rates were in North Dakota (1.3%), Virginia (1.9), Texas (2.4), Wyoming (2.8), Maine (2.9), Maryland (3.1), Ohio (3.3), Mississippi (3.4), New York (3.5), and Florida (3.2). The data are not seasonally adjusted but the overall insured unemployment rate is.

The unemployment insurance claims data is available in Haver's WEEKLY database and the state data is in the REGIONW database. 

Machinery orders are a volatile measure almost by design. Because of the lumpy nature and large scope of some projects it is hard to get a reliable reading on this series. Looking at core orders is one way to stabilize the signal. This measure excludes the most volatile components of the order series. In October core orders fell, but that was after rising by a sharp 10.5% in December. The sequential growth rate of orders is on a strong upswing despite this month’s set back.

The overall orders measure that includes those large and lumpy projects also is improving strongly. For once the trends of the two series are in agreement even if the monthly numbers are going in different directions.

The chart also shows domestic Vs foreign machinery orders. While both series are showing some rise it is the foreign orders that are doing most of the improvement. Japan like Germany is benefitting more from demand outside of its country than from the domestic demand within.

A lower value of the dollar improves the competiveness of U.S. exports. That undoubtedly was behind at least some of the decline in October's trade deficit to $32.9B following a September deficit of $35.7, which was revised lower from the initial estimate. Exports rose sharply, their sixth month of increase despite economic weakness abroad, while imports fell with a modest decline in oil prices. The latest figure was quite a bit lower than Consensus expectations for a deficit of $37.0B.

Reflecting the competitive value of the dollar, nominal exports rose 2.6% m/m and by 12.4% from the April low. Adjusted for price inflation, however, the gain is more impressive. Real merchandise exports during October rose 4.1% (-6.0% y/y), the third such increase in four months. A  higher chained-dollar value of non-auto consumer goods exports led the increase with a 7.9% (3.5% y/y) surge after the 3.7% September jump. Real capital goods exports were not far behind and posted a 3.6% gain (-10.7% y/y) after a 5.2% September rise. Auto exports also were strong for the fifth straight month (-20.6% y/y). Exports of services rose for the fifth straight month (-5.6% y/y).

Overall imports rose just 0.4%, the gain held back by lower oil prices. Petroleum imports fell 9.7% m/m (-39.7% y/y) as the average daily quantity imported fell 12.5% (-19.2% y/y). The dip in the per barrel cost of crude petroleum to $67.39 helped the overall figure to decline. Working the other way, U.S. economic recovery was apparent in real nonoil imports which rose 2.2% during October for the third increase in four months. These gains lessened the y/y decline to 11.9% from its worst of 24.6%. Real non-auto capital goods imports jumped 3.5% (-13.0% y/y) after a 2.8% September rise. Real nonauto consumer goods imports rose 2.6% and by 7.8% since June. These gains are turnarounds from earlier sharp declines. Real automotive vehicles & parts imports also jumped 1.9% (-7.4% y/y) in October, the fifth consecutive month of gain. Finally, services imports rose a modest 0.2% (-7.3% y/y) as U.S. travels abroad were discouraged by the lower dollar. Travel imports fell 7.2% y/y and passenger fares fell 27.0%)

By country, the trade deficit with China fell to $22.7B from $27.9B last October as exports rose 12.7% y/y and imports fell 13.3%. With Japan, the trade deficit also narrowed sharply to $4.4B from 6.1B one year earlier as the 21.0% decline in imports outpaced the 13.0% decline in exports. With the European Union, the trade deficit more than halved to $4.9B as imports fell 20.5% y/y which was twice the decline in exports.

The international trade data can be found in Haver's USECON database. Detailed figures are available in the USINT database.

The financial health of U.S. households continued to improve last quarter, as indicated by the Federal Reserve's latest flow-of-funds figures. Household net worth increased $2.7 trillion to $53.4 trillion after a downwardly revised $2.3 trillion 2Q increase. Financial asset holdings improved by $2.4 trillion as the stock market moved higher after a $1.9 trillion 2Q rise. Lower interest rates raised the value of Treasury security holdings  by $168 billion and tangible asset values rose by $294 billion following the $391 billion 2Q rise. These gains were helped, finally, by an improved value of real estate holdings. Despite the gains, however, the value of households' real estate holdings remained 27.9% below the late-2006 peak.

Household financial positions also improved due to the reduction of liabilities, though that was small when compared to the rise in assets. Total liabilities fell $12.0 billion. While the decline was the fifth in the last six quarters, it paled versus recent $30-to-$300 quarterly reductions. Mortgage debt reduction was the largest, down for the sixth straight quarter, but consumer credit started to grow again along with bank loans.