Job Market Still Healthy, Inventories Match Record Low

- Initial Jobless Claims for last week fell to 309K versus estimates of 312K and 310K the prior week.

- Continuing Claims rose to 2535K versus estimates of 2500K and 2463K prior.

- Wholesale Inventories for April rose .3% versus estimates of a .3% increase and an upwardly revised .4% gain in March.

BOTTOM LINE: The number of Americans filing first-time claims for state unemployment benefits fell unexpectedly last week, pointing to a resilient labor market, Bloomberg reported. The unemployment rate among those eligible for benefits, which tracks the US unemployment rate, held at a historically low 1.9%. The four-week moving average of jobless claims rose to 307,250. I continue to believe the job market will remain healthy over the intermediate-term without generating substantial unit labor cost increases.

Inventories at US wholesalers rose in April while sales increased faster, setting the stage for an increase in production, Bloomberg reported. Sales at wholesalers rose 1.3% versus a 2.1% gain the prior month. The ratio of inventories to sales is now matching a record low. Petroleum inventories surged 6.3% versus a 4.9% gain the prior month. I continue to believe US growth is rebounding substantially this quarter to around 3% or slightly higher, but I expect growth to decelerate back to around 2% or slightly higher in 3Q as inventory rebuilding subsides and the effects of the recent rise in long-term rates takes hold.