Thursday, December 27, 2007

Durable Goods Orders Rise, Jobless Caims Rise Slightly, Consumer Confidence Improves

- Durable Goods Orders for November rose .1% versus estimates of a 2.0% gain and a .4% decline in October.

- Durables Ex Transports for November fell .7% versus estimates of a .5% increase and a .9% decline in October.

- Initial Jobless Claims for this week rose to 349K versus estimates of 340K and 348K the prior week.

- Continuing Claims rose to 2713K versus estimates of 2645K and 2638K prior.

- Consumer Confidence for December rose to 88.6 versus estimates of 86.5 and a reading of 87.8 in November.

BOTTOM LINE: Orders for US durable goods rose less than forecast in November, partially restrained by a drop in defense orders, Bloomberg reported. Orders for military equipment fell 24%. However, Bookings Excluding Defense Equipment rose 1.2%. Orders for non-defense capital goods excluding aircraft, a gauge of future demand, declined .4% versus a 2.9% decline in October. Shipments of those items, used in computing GDP, rose .2% versus a 1.2% drop in October. Orders for transportation equipment rose 1.9%, boosted by a 21% jump in commercial aircraft demand. I expect Durable Goods Orders Ex Transports to rebound next month on inventory rebuilding.

The number of Americans filing first-time jobless claims for unemployment insurance rose slightly last week, Bloomberg reported. However, the four-week moving-average of new claims fell to 342,500 from 343,500. As well, the unemployment rate among those eligible to collect benefits, which tracks the US unemployment rate, remained at a historically low 2%. I continue to believe the job market will remain healthy over the intermediate-term without generating substantial unit labor cost increases.

Consumer confidence in the US unexpectedly rose in December, led by a gain in optimism about the future, Bloomberg said. However, the Present Conditions component fell to 108.3 from 115.7 the prior month. The Future Expectations component rose to 75.5 from 69.1 the prior month. Those consumers expecting more jobs in the next six months rose to 11.2% from 10.6% the prior month. The percentage of consumers planning to purchase an automobile over the next six months rose to 6.1% from 4.8% in November. This month’s gain in the headline confidence index was boosted by a surge in confidence in the Southeast Central(+19.5% to 97.0) and the Northwest Central regions(+15.3% to 108.3). I expect consumer confidence to improve again next month on diminishing credit market angst, less overall economic pessimism, lower interest rates, lower energy prices, higher stock prices and a stable job market.

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