US Jobless Claims Rise; Philly Fed Shows Weak Manufacturing

Initial Jobless Claims

The latest report on US initial jobless claims revealed a slight increase, with claims reaching 222,000 for the current week, marginally above the 220,000 forecast. This is a decrease from the prior week’s revised figure of 232,000. The four-week moving average of initial claims rose to 217,750 from 215,250, indicating a modest upward trend.

Continuing claims also showed an increase, hitting 1.794 million, surpassing the estimated 1.785 million. The four-week moving average for continuing claims slightly decreased to 1.779 million from the previous week’s 1.780 million. Despite these fluctuations, the labor market remains robust, with the seasonal effects of Easter likely contributing to the minor variations.

Monthly New Residential Construction

The latest data on new residential construction for April 2024 shows a mixed picture. Building permits were issued at a seasonally adjusted annual rate (SAAR) of 1.44 million, down 3% from March’s revised rate of 1.485 million and 2% lower than April 2023’s 1.47 million. Single-family authorizations dipped to 976,000, a 0.8% decrease from March.

Housing starts in April reached a SAAR of 1.36 million, up 5.7% from March’s revised 1.287 million but 0.6% lower than the same month last year. Single-family starts were relatively stable at 1.031 million, a slight decline from March’s revised 1.035 million. Housing completions surged to 1.623 million, reflecting robust activity in the sector.

Philadelphia Fed Manufacturing Survey

The Philadelphia Fed’s May 2024 Manufacturing Business Outlook Survey indicates weakening regional manufacturing activity. The general activity index dropped to 4.5 from 15.5, reflecting a decline in growth momentum. New orders and shipments turned negative, with indexes falling to -7.9 and -1.2, respectively.

Employment indicators remained weak, with the employment index at -7.9, although it showed a slight improvement from last month. Price indexes indicated continued increases in both input and output prices but stayed below long-term averages. Despite current challenges, firms maintain a positive outlook for the next six months, expecting growth in activity, new orders, shipments, and employment.

Summary

Given the mixed economic data, the market outlook remains cautious. The slight increase in jobless claims and continuing claims suggests some softness in the labor market, but overall employment remains strong. The residential construction data indicates ongoing demand in the housing sector, albeit with some fluctuations. Manufacturing shows signs of strain but with an optimistic future outlook.

Market sentiment is expected to be neutral to slightly bearish in the short term, influenced by the mixed economic signals and uncertainties in manufacturing and labor markets. Traders should remain vigilant, focusing on upcoming data releases for clearer market direction.