It’s a double shot of bad news today as jobless claims soar while factory orders sink.
Weekly Claims For The Week Ending Jan. 31
Chart from US Department of Labor.
The best way to look at weekly claims is the 4 week moving average which smooths out minor week to week variations. The moving average has been trending up for well over a year. Compare the number from today to a year ago: 582K vs. 339K. Remember that the economy was losing jobs rapidly a year ago. This is evidence that upcoming monthly jobs reports are going to be dismal.
New Jobless Claims Jump To 626K
Inquiring minds are digging deeper into New jobless Claims.
New jobless claims jumped far more than expected last week in an already dismal labor market, and there’s no relief in sight for workers as mass layoffs persist.
The Labor Department reported Thursday that the number of newly jobless workers seeking benefits rose last week to a seasonally adjusted 626,000, from the previous week’s upwardly revised figure of 591,000. The latest total is far more than analysts’ expectations of 583,000.
That’s also the highest since October 1982, when the economy was in a steep recession, though the work force has grown by about half since then.
The numbers reflect the large spate of layoffs announced last month by companies from all sectors of the economy, including Caterpillar Inc., Pfizer Inc. and Microsoft Corp. The layoffs continued Thursday with cosmetics maker Estee Lauder Cos. saying its fiscal second-quarter profit fell 30 percent and it plans to begin a four-year restructuring plan that will include cutting 2,000 staffers, or 6 percent of the work force. The company will also continue its hiring freeze.
The number of people that remained on the unemployment compensation rolls increased slightly to nearly 4.8 million, the Labor Department said, most since records began in 1967. The continuing claims data lags the number of new claims by one week.
As a proportion of the work force, the number of people receiving unemployment benefits is at the highest level since August 1982. But that doesn’t include an additional 1.7 million people receiving unemployment insurance through an extension of benefits Congress approved last year, which brings the total to about 6.5 million.
The extension provides up to 33 additional weeks of benefits, on top of the 26 weeks typically provided by states.
Read that paragraph above in red one more time. Think the reported unemployment number is as advertised?
U.S. December Factory Orders Fall Fifth Month
Bloomberg is reporting U.S. December Factory Orders Fell More Than Forecast.
Orders placed with U.S. factories fell in December for a fifth month, reflecting a pullback in business spending that will extend the recession.
Bookings declined 3.9 percent, more than forecast, after a revised 6.5 percent drop in November, the Commerce Department said today in Washington. Other reports showed firings jumped at the end of January.
Today’s report showed orders for non-durable goods including food, petroleum and chemicals fell 4.8 percent in December. Bookings for petroleum and coal products fell 18 percent.
Orders for durable goods, which make up just over half of total factory demand, fell 3 percent, after a 4 percent drop the previous month.
Civilian aircraft orders plunged 44 percent after declining 46 percent the prior month.
Boeing Co., the world’s second-biggest commercial-airplane maker, last week said customers may continue to cancel or defer orders in 2009 as demand for travel slides and credit remains restricted. The Chicago-based company reported a fourth-quarter loss and announced plans to cut 10,000 jobs.
Bookings for auto assemblies and parts decreased 5.7 percent in December. The deterioration has spilled over into this year: U.S. sales plummeted 49 percent in January at General Motors Corp., the biggest U.S. automaker, and 40 percent at No. 2 Ford Motor Co., the companies said.
Orders for construction machinery plummeted 28 percent.
Bookings for capital goods excluding aircraft and military equipment, a measure of future business investment, fell 3.2 percent after a 1.1 percent gain.
What Happened To Hope and Change?
YahooFinance is asking Obama Warns of ‘Catastrophe:’ What Happened to ‘Hope’ and ‘Change?’
“A failure to act, and act now [on the bill], will turn crisis into a catastrophe,” Obama said, sounding a lot more like his predecessor than the candidate of hope and change.
Even as he sees the potential for a near-term rally, Todd Harrison, CEO of Minyanville.com, says Obama is understandably worried about the risk of Congressional inaction. “He’s right there’s potential for this [economy] to get much worse and manifest itself not only financially, but through societal unrest,” he says.
More than Obama’s rhetoric or what’s in the stimulus bill, Harrison is worried that protectionist policies worldwide could lead to heightened geopolitical tension and, ultimately, global war. Now that’s something to really be worried about.
Todd Harrison discusses fear tactics vs. the window of hope and whether the market can rally in the face of this news in a video in the link above. While Obama is worried about the risk of Congressional inaction, I am worried about Congressional action. Todd is certainly correct about the sabre rattling, protectionist policies, and heightened geopolitical tensions. We can all hope this does not move beyond sabre rattling to something more dramatic.
Mike “Mish” Shedlock
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