Initial Claims come in at 667. Durable Goods Sales -5.2%
The US Initial Claims came in at the lowest level since October 1982 when 695K claims were processed. The Continuing Claims rose to 5112 from a revised 4998K.
The 4 week moving average rose to 639,000 for Initial Claims. As a reference for comparison, the 4 week moving average from a month ago has risen by 95,700 jobs. In December 2008, the rate of increase of the 4 week average was only 40,300 jobs.
Obviously, the pace of layoffs is accelerating . This should translate into a much weaker Unemployment Report to be announced next Friday (March 6th). Currently, estimates are for a decline of 615,000 Non Farm Payroll jobs. The unemployment rate is currently expected to rise to 7.9% from 7.6%. The estimates will most likely be increased.
Meanwhile, Durable Goods came in at -5.2% and the prior month was revised to -4.6% from -3.0%. Ex Transportation came in at -2.2% and the prior month was revised to -.5.5%. This is the 6th straight month of zero or negative growth.
All the numbers were horrible and should lead to an even larger non farm payroll decline and increase in the US Unemployment rate. The follar has fallen against the USDJPY and the USDCHF but has risen against the EURUSD and GBPUSD. The market has little in the way of safe haven places to go, which should keep currency pairs volatile and range bound.
New Home Sales for the month of January will be released at 10:00 AM
At 10:00 AM the US New Home Sales for the month of January will be released. The expectation is for another decline to 324K from 331K. Sales at these levels are equivalent to the sale pace in 1982. This is despite the much higher population. Obviously, supply got way out of line iwth demand, prices of the new McMansion’s were too high and whent the bubble burst, the homebuilders were left holding the bag. Now unemployment surging is causing another wave of demand destruction.
Now, home builders are offering sub 4% mortgages and some are giving support if jobs are lost. The Existing Home saless which were released yesterday, slumped again. New Home Sales account for less than 20% of the US home sale marktet with Existing Home Sales making up the rest.
US Initial and Continuing Claims due out at 8:30 AM
Also out at 8:30 AM will be the US Initial and Continuing Claims data for the current weeks. The Initial Claims have been above 625 for three straight weeks. This week the expectation is for another elevated reading of 625K. Note however, this week included the Presidents Day holiday. This may cause a dip as there is one less day to file a claim.
The Continuing Claims is expected to come in at 5,025K up from 4987K .
Needless to say, employment remains under pressure. The 4 week moving average of the initial Claims has surged at the fastest pace in the most recent move higher than at any time in this jobs recession. This suggests another surge in the Unemployment Rate next month and another large drop in Non Farm Payrolls.
US Durable Goods Orders to be released at 8:30 AM
The US Durable Goods Orders for the month of January is due at 8:30 AM. Last month orders fell by a revised 3% (originally reported at -2.6%). This was the 5th month of zero or negative growth. The Core measure which takes out transportation components, fell by a greater 3.9%. This measure has shown zero or negative growth for 6 straigth months.
This month the expectation is for a decline of 2.5% for the headline and -2.2% for the ex transportation. The decline will be the first time since 1981 that Durable Goods have fallen for 6 months straight.
Slowing home sales, higher unemployment and slower export growth will keep big ticket items like durable goods down. The trend remains the same.
BoE’s King on the Wires
BoE’s King: Global banking system lacking confidence – Testimony to UK Treasury Committee
- Notes an “extreme” loss of confidence in Banks
- Important for gov’t to support Bank balance sheets
- Will not allow inflation to increase rapidly, money supply is currently not growing quickly enough
EUROZONE Consumer Confidence Released
The EU Consumer Confidence dropped to -33 from the previous -31. No change was forecast from this previous -31.
The EUR softened up slightly following this worse than expected release.
German Unemployment Change Released
The German Unemployment Change came out at 40K from the previously revised 59K. A rise to 60K was forecast.
The EUR was firming up into this number and unchanged due to the data.
UK’s Chancellor Darling on the Wires
UK Chancellor Darling: Previously announced banking scheme aims to rebuild confidence in system
- Says UK banks must clean up their balance sheets
- Ultimate target is to return RBS or any bank with govt holding back to private sector
- Taxpayers’ economic interest in RBS will rise to a little above 80%
- Hopes govt will obtain significant returns from plan; says risk may be longer and deeper without plan
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