Jobless Claims Stable, NY Manufacturing Decelerates, International Demand for US Assets Strong, Philly Fed Improves, Industrial Production Drops

- Initial Jobless Claims for this week rose to 371K versus estimates of 370K and 365K the prior week.

- Continuing Claims rose to 3060K versus estimates of 3035K and 3032K prior.

- Empire Manufacturing for May fell to -3.2 versus estimates of 0.0 and a reading of .6 in April.

- Net Long-term TIC Flows for March rose to $80.4 billion versus estimates of $62.5 billion and $64.9 billion in February.

- Industrial Production for April fell .7% versus estimates of a .3% decline and a .2% increase in March.

- Capacity Utilization for April fell to 79.7% versus estimates of 80.1% and 80.4% in March.

- Philly Fed for May rose to -15.6 versus estimates of -19.0 and a reading of -24.9 in April.

BOTTOM LINE: The number of Americans filing first-time claims for unemployment insurance rose slightly last week, Bloomberg reported. The four-week moving average of jobless claims fell to 365,750 from 366,750 the prior week. The unemployment rate among those eligible for benefits, which tracks the US unemployment rate, held steady at a historically low 2.3%. Jobless claims remain at levels more indicative of sluggish economic activity rather than outright contraction. I expect the job market to firm modestly through year-end.

Manufacturing in NY shrank slightly in May, Bloomberg reported. The New Orders component fell to -.5 from .1 the prior month. The Inventories component fell to -6.5 from -4.2 prior. The Prices Paid component rose to 69.6 from 57.3 in April. The Employment component rose to 1.1 from 0.0 in April. The Future Outlook component jumped to 23.9 from 19.6 in April. Manufacturing should improve modestly through year-end as companies rebuild inventories, domestic demand improves, exports remain strong and the America Axle strike ends.

Foreign buying of US financial assets rose more than forecast in March, posting the biggest gain in five months, Bloomberg reported. International investor demand for US Treasuries increased by $55 billion in March versus a gain of $20.6 billion in February. International buying of US stocks rose by a net $11.5 billion versus net buying of $1.1 billion in February. US investors sold a net $300 million of overseas assets in March versus sales of $12.9 billion the month before. The difference between the trade gap and securities purchased by foreigners is an indication of how easily the US can finance its external obligations. I expect foreign demand for US assets to remain strong over the intermediate-term.

Industrial production fell more than expected in April, Bloomberg reported. Motor vehicle production fell 8.2% after a 4.3% decline the prior month. Autos were assembled at an 8.3 million annual pace last month, the lowest amount since a strike-depressed 8.2 million in July 1998. Output of computers and peripheral equipment increased .5%. Part of the slump in industrial production last month was due to the protracted strike at American Axle, GM’s biggest axle supplier. The United Auto Workers walkout at American Axle, which began Feb. 26, idles all or part of as many as 33 GM factories, and reduced GM’s production by 230,000 vehicles through April. Industrial Production and capacity utilization should trend higher through year-end.

Manufacturing in the Philly region shrank less-than-expected in May, Bloomberg reported. The New Orders component rose to -3.7 from -18.8 the prior month. The Prices Paid component rose to 53.8 from 51.6 the prior month. The Future Outlook gauge surged to 28.2 from 13.7 in April. I expect the Philly Fed to continue to show improvement next month.