Job Market Still Healthy, Leading Indicators Rise Slightly, Philly Fed Falls Slightly, Prices Paid Down 52% from October Highs

- Initial Jobless Claims for last week fell to 299K versus estimates of 310K and 309K the prior week.
- Continuing Claims rose to 2453K versus estimates of 2445K and 2428K prior.
- Leading Indicators for September rose .1% versus estimates of a .3% increase and a .2% decline in August.
- The Philly Fed for October fell to -.7 versus estimates of 7.0 and a reading of -.4 in Septebmer.

BOTTOM LINE: The number of Americans filing first-time claims for unemployment benefits unexpectedly fell last week to the lowest level in almost three months, suggesting the job market remains buoyant, Bloomberg reported. The four-week moving-average fell to 307,750 from 313,500 the prior week. The unemployment rate dropped in September to a historically low 4.6%. The unemployment rate among those eligible for jobless benefits, which tracks the US unemployment rate, held steady at 1.9% this week. I continue to believe the job market will remain healthy over the intermediate-term without generating substantially unit labor cost increases.

An index of US leading economic indicators rose less than expected in September, Bloomberg reported. Five of ten indicators contributed to a gain. Improving confidence, rising incomes and higher stock prices are boosting the leading indicators. I expect GDP growth to come in around 1.5-2.0% in the third-quarter before rebounding to around 3-3.5% this quarter.

Manufacturing in the Philly area unexpectedly contracted slightly for a second month, Bloomberg reported. However, the new orders component of the index surged to 13.4 from -1.3 in September. The prices paid component fell to 32 from 38.1 the prior month. The prices paid component has plunged 52% from October 2005 highs. I expect the Philly Fed to rebound next month as manufacturers rebuild low inventories and consumer spending remains strong.