- Initial Jobless Claims for this week rose to 407K versus estimates of 366K and 369K the prior week.
- Continuing Claims rose to 2937K versus estimates of 2860K and 2840K prior.
- ISM Non-Manufacturing for March rose to 49.6 versus estimates of 48.5 and 49.3 in February.
BOTTOM LINE: The number of Americans filing first-time claims for unemployment benefits unexpectedly increased last week, Bloomberg reported. This week’s report may have been skewed as some state unemployment offices processed a backlog from the prior week, which included the Good Friday holiday. The unemployment rate among those eligible for benefits, which tracks the US unemployment rate, rose to 2.2% from 2.1%. The four-week moving average of claims rose to 374,500 from 358,750 the prior week. A strike at auto-parts supplier American Axle is contributing to declining employment at GM plants. The strike has closed or idled 30 plants, affecting almost 50% of GM’s employees. I still expect tomorrow’s jobs report to modestly exceed estimates. Jobless claims should fall next week.
Service industries in the US beat economists’ forecasts in March, easing concern the economy was slowing too much, Bloomberg reported. The ISM non-manufacturing index captures about 90% of the US economy. The Employment component of the index was unch. at 46.9. The Business Activity component rose to 52.2 from 50.8 in February. The New Orders component rose to 50.2 from 49.6 the prior month. The Prices Paid component rose to 70.8 from 67.9 in February. The Inventories component rose to 51.0 from 50.0 prior. This reading does not indicate the US is in recession. I continue to believe that after a slight contraction in 1Q, US growth will bounce back into positive territory this quarter on monetary/fiscal stimuli, booming exports and inventory rebuilding. An end to the American Axle strike and a decline in energy prices could also help boost growth later this quarter.
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