Job Market Still Very Healthy, Factory Orders Rise

- Initial Jobless Claims for last week fell to 307K versus estimates of 310K and 303K the prior week.

- Continuing Claims rose to 2525K versus estimates of 2548K and 2541K prior.

- Factory Orders for June rose .6% versus estimates of a 1.0% gain and a -.5% decline in May.

BOTTOM LINE: First-time claims for jobless benefits rose less than forecast last week, indicating the labor market is still expanding, Bloomberg said. The four-week moving average of claims fell to 305,500 from 309,000 the prior week. The unemployment rate among those eligible for benefits, which tracks the US unemployment rate, held steady at a historically low 1.9%. We have been hearing for two years that the housing downturn would lead to an imminent economic decline as consumer spending collapsed, sending unemployment soaring. I see no evidence of this. The latest consumer confidence report just hit new cycle highs, jobless claims are falling to historically low levels and retail sales are accelerating. And that is with oil at record highs and housing-related fear stories rampant in the media. I continue to believe the job market will remain healthy over the intermediate-term without generating substantial unit labor cost increases.

Orders placed with American factories rose in June as international buyers, buoyed by the strongest global expansion since the 1970s, bought more aircraft. Orders for durable goods, which make up over half of total factory demand, surged 1.3% in June versus a 2.4% decline the prior month. Today’s report showed business spending plans were unchanged in June, a revision from a previously reported drop. Bookings for capital goods ex aircraft and military equipment, a gauge of future business investment, were unch. after declining 1.5% in May and up from a previous estimate of a .7% decline. I continue to believe manufacturing will add to economic growth through year-end as companies gain more confidence in the sustainability of the current expansion as consumer spending accelerates and rebuild inventories from depleted levels.