Job Market Still Healthy, Leading Indicators Fall, Philly Fed Jumps

- Initial Jobless Claims fell to 311K versus estimates of 321K and 320K the prior week.

- Continuing Claims fell to 2544K versus estimates of 2575K and 2597K prior.

- Leading Indicators for August fell .6% versus estimates of a .4% decline and an upwardly revised .7% increase in July.

- Philly Fed for September rose to 10.9 versus estimates of 2.6 and 0.0 in August.

BOTTOM LINE: The number of US workers filing claims for jobless benefits unexpectedly fell last week, easing concern the labor market was softening, Bloomberg reported. The four-week moving-average of claims fell to 320,750 from 324,250 the prior week. The unemployment rate among those eligible for benefits, which tracks the US unemployment rate, fell to a low 1.9% from 2.0% the prior week. Claims have been resilient even after a jump in firings by mortgage lenders following the credit turmoil in August, according to economists. So far this year, jobless claims have averaged 318,000, just slightly higher than last year’s 313,000. I continue to believe the US job market will remain healthy over the intermediate-term without generating substantial unit labor cost increases.

The index of leading US economic indicators fell in August by the most in six months reflecting lower confidence and a rise in jobless claims, Bloomberg reported. A .22 percentage point subtraction came from the Univ. of Mich. consumer sentiment index and a .19 percentage point subtraction came from the uptick in jobless claims. Money supply adjusted for inflation added .33 percentage points to the indicator. I expect leading indicators to bounce back next month on lower jobless claims, better sentiment and higher stock prices.

Manufacturing in the Philly region accelerated more than forecast this month as orders and sales improved, Bloomberg said. As well, new orders came in at 15.1 vs. 7.1 in August. The prices paid component rose to 23.1 from 15.4, but this is still well off May 2006 highs of 54.0. The future outlook component of the index fell to 35.7, down slightly from 36.2 in August. I continue to believe manufacturing will help boost economic growth over the intermediate-term as companies gain confidence in the sustainability of the current expansion and rebuild depleted inventories.