Jobless Claims Decline, Philly Fed Weak, Leading Indicates Slightly Lower

- Initial Jobless Claims for this week fell to 349K versus estimates of 349K and 358K the prior week.

- Continuing Claims rose to 2736K versus estimates of 2760K and a downwardly revised 2736K prior.

- Philly Fed for February fell to -24.0 versus estimates of -10.0 and a reading of -20.9 in January.

- Leading Indicators for January fell .1% versus estimates of a .1% decline and an upwardly revised .1% decline in December.

BOTTOM LINE: The number of Americans filing first time jobless claims fell this week, Bloomberg reported. The four-week moving average of claims rose to 360,500. The unemployment rate among those eligible to collect benefits, which tracks the US unemployment rate, held steady at a historically low 2.1%. Jobless claims and the unemployment rate still remain well below levels normally associated with economic contraction. I continue to believe the job market will strengthen to more healthy levels over the intermediate-term.

The Philly region gauge of manufacturing contracted more than economists expected this month, Bloomberg reported. The New Orders component of the index rose to -10.9 from -15.2 the prior month. The Inventories component of the index fell to -13 from -11.7 the prior month. The Employment component rose to 2.5 from 1.5 the prior month. The Prices Paid component fell to 46.6 from 49.8 in January. I expect this gauge to rebound in March on inventory rebuilding as exports continue to boom.

The Conference Board’s index of leading US economic indicators fell slightly in January on weakness in stocks and housing, Bloomberg reported. The Conference Board’s index of coincident indicators rose .1% for a second consecutive month. Yesterday, the Conference Board said that a US recession was unlikely and that the housing sector correction was nearly over. Fed funds futures now imply a 96% chance for a 50 basis point cut at the March 18^th meeting and a 4% chance for a 25 basis point cut. I still expect US growth of around 1% this quarter, with a slight pick-up next quarter. I continue to believe US growth will average about 2% for the year as the effects of the stimulus take hold in the second half, inflation decelerates, exports continue to boom and companies rebuild depleted inventories.