Corporate Spending Rising, Labor Market Remains Strong

- Durable Goods Orders for December rose 1.3% versus estimates of a 1.0% rise and an upwardly revised 5.4% gain in November.
- Durables Ex Transportation for December rose .9% versus estimates of a 1.0% increase and an upwardly revised .6% gain in November.
- Initial Jobless Claims for last week were 283K versus estimates of 300K and 272K the prior week.
- Continuing Claims fell to 2581K versus estimates of 2600K and 2528K prior.

BOTTOM LINE: US durable goods orders rose more than forecast last month, led by the biggest increase in business equipment demand since August and suggesting corporate spending will spur the economy early this year, Bloomberg reported. Corporate spending is accelerating as record corporate profits allow increased spending on factories and machines to keep productivity high. Bookings for non-defense capital goods excluding aircraft, a measure of future business investment, gained 3.5% in December, the best in 4 months. As well, unfilled orders rose .6% last month. Finally, a recent survey by the National Association for Business Economics showed 50% of companies plan to increase capital spending over the next 12 months. I continue to believe corporate spending will exceed expectations this year, helping to keep US economic growth healthy.

The number of Americans filing first-time claims for unemployment benefits rose less-than-expected last week, a signal of more strength in the labor market, Bloomberg reported. The four-week moving average fell to its lowest since July 2000. The unemployment rate among those eligible for benefits, which tracks the US unemployment rate, remained at 2.0%. The economy likely gained 235,000 new jobs in January, according to the median forecast by Bloomberg. I continue to believe the labor market will remain healthy without generating substantial inflationary pressures.