Thursday, May 18, 2006

Jobless Claims Rise, Leading Indicators Fall

- Initial Jobless Claims for last week rose 367K versus estimates of 319K and 325K the prior week.
- Continuing Claims rose to 2389K versus estimates of 2420K and 2381K prior.
- Leading Indicators for April fell .1% versus estimates of a .1% increase and an upwardly revised .4% rise in March.
BOTTOM LINE: The number of Americans filing first-time applications for unemployment benefits rose last week to the highest level since early October, primarily due to a government shutdown in Puerto Rico that has since been resolved, Bloomberg said. Excluding a 46,000 increase in claims from Puerto Rico, filing would have come in around 312,000. The four-week moving-average of claims rose to 333,250 from 317,500 the prior week. The unemployment rate among those able to receive benefits, which tracks the US unemployment rate, remained at 1.8%. I continue to believe the labor market will remain relatively healthy over the intermediate-term without generating substantial unit labor cost increases.

An index of US leading economic indicators unexpectedly declined in April, pointing to a slowdown from the fastest pace of growth in more than two years, Bloomberg said. The index was dragged down by declines in building permits and consumer sentiment. According to Bloomberg, the government will raise its first quarter GDP growth estimate to a booming 5.8%. I continue to believe US economic growth peaked during 1Q and will decelerate back to average levels through year-end.

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