Thursday, August 19, 2010

Initial Claims and Philly Fed

The initial claims data was surprisingly weak and included a revision downward of last week's data. As everyone has heard by now this was the worst week for claims since November of last year and the four week moving average - a better indicator of the trend in claims -has turned up sharply after holding steady for most of the year.

It's interesting to note that the current 4 week moving average of initial jobless claims -482k - is roughly inline with where it was at the PEAK of the 2001-2002 recession. This might explain why our "recovery" still feels like a recession to so many.

The Philly Fed survey (a widely watched measure of economic activity) turned negative in July.

"The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, decreased from a reading of 5.1 in July to ‐7.7 in August. The index turned negative, marking a period of declining monthly activity for the first time since July 2009. Indexes for new orders and shipments also suggest a slowing this month."

Obviously, these two factors have weighed heavily on the markets today but there is plenty of time for the 3pm auto-pilot to come to the rescue.

Cheers.

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