Initial Jobless Claims Fall, Job Cuts Decline, Factory Orders Surge

- Initial Jobless Claims for this week fell to 336K versus estimates of 345K and 357K the prior week.

- Continuing Claims rose to 2761K versus estimates of 2675K and 2715K prior.

- Factory Orders for November rose 1.5% versus estimates of a .5% gain and an upwardly revised .7% increase in October.

BOTTOM LINE: The number of Americans filing first-time claims for unemployment benefits fell last week, Bloomberg reported. A private survey based on payroll data from ADP showed the US created 40,000 jobs in December, 7,000 more than estimates. The four-week moving average of jobless claims fell to 343,750 from 344,500 the prior week. Moreover, Challenger Job Cuts fell -18.7% in December from year ago levels. The unemployment rate among people eligible to collect benefits, which tracks the US unemployment rate, rose to 2.1% from 2.0% the prior week. Jobless claims would have to move above 370,000 to be indicative of a broad economic contraction. I suspect the change in non-farm payrolls for December, released tomorrow, will come in slightly below estimates of 70K. As well, the unemployment rate is likely to come in around estimates of 4.8%, which is still low by historic standards. I continue to believe the labor market will remain healthy over the intermediate-term without generating substantial unit labor cost increases.

Orders to US factories rose more than forecast in November, Bloomberg reported. The 1.5% gain in orders was the most in four months. Excluding transportation, bookings rose 1.4%. Bookings for non-durable goods surged 3%, the most since March 2005. Commercial aircraft orders rose 21%. Orders for non-defense capital goods excluding aircraft, a gauge of future business spending, fell .1% versus a 3% decline in October. Shipments of those goods, which are used to calculate GDP, rose .2% versus a 1.2% decline in October. Manufacturers had 1.22 months of goods on hand versus 1.23 months worth in October. I continue to expect manufacturing to help boost overall US growth over the intermediate-term as companies gain confidence in the sustainability of the current expansion and rebuild depleted inventories as a result of record high exports.