3 Numbers: German Mood Positive, BOE Rate Decision, U.S Jobless Claims
James Picerno | Apr 09, 2015 02:15AM ET
It’s a busy day for economic news, starting with the monthly update on Germany's industrial production — a release that will be closely read after yesterday's disappointing report on new orders for manufactured goods. The Bank of England’s interest-rate statement that arrives soon after will be a key event in the wake of conflicting comments from policymakers in recent weeks. Meanwhile, the weekly release on US jobless claims will provide more context for evaluating last week’s disappointing numbers for payrolls in March.
reported. “Where companies noted an increase in new export business, they partly linked this to the weak euro.”
Does the upbeat mood among manufacturers lay the groundwork for ongoing growth in industrial output? Probably, although keep an eye on today’s year-over-year comparison for additional perspective. Measured in raw terms, industrial production slipped 2.3% in January compared with the year-earlier level. That’s a reminder that despite the recent improvement in the macro profile, there’s still a fair amount of risk hovering over the current phase of recovery. Even so, given the upbeat mood in manufacturing — the core facet for industrial activity — output will likely trend positive for the foreseeable future.
US: Initial Jobless Claims (12:30 GMT) There’s more uncertainty on the outlook for the US labour market in the wake of last week’s disappointing report for payrolls in March. Yet some of the incoming numbers since Friday’s news of a dramatic deceleration in growth last month provide a degree of comfort for thinking that the March stumble isn’t as dark as it appears.
The positive clues include the upbeat numbers for the services sector in March via the ISM Non-Manufacturing Index, the robust and slightly stronger growth rate for employment in particular. Meantime, the government’s estimate of job openings in February ticked up to a 14-year high.
Today’s weekly update on new filings for unemployment benefits will provide another data point for deciding if last month's slowdown in growth is temporary or the start of an extended run of weakness. For the moment, jobless claims leave plenty of room for optimism.
Indeed, filings dropped sharply in the final full week of March, to a seasonally adjusted 268,000— a whisker away from a post-recession low. According to this leading indicator, the outlook for payrolls, and the economy, remains bright overall. Why then did payrolls suffer last month? Arguably it’s mostly due to weakness in the oil patch. Thanks to a dramatic slide in oil prices since last summer, layoffs have jumped sharply in the energy industry. In short, the deceleration in jobs is a relatively contained event.
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Today’s claims data is expected to give back most of the previous decline. Briefing.com’s consensus forecast sees new filings rising to 285,000. If so, the worst you can say is that claims are more or less unchanged over the past several months. But that still translates into a healthy year-over-year decline of roughly 8% for last week. That’s weak tea for economy bears looking for a smoking gun.
Disclosure: Originally published at Saxo Bank TradingFloor.com
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