Lots of data out this morning. The good news is the US economy still isn’t showing signs of contraction. The bad news is the data wasn’t particularly strong. Here’s a brief round-up:
- Initial jobless claims were down 9,000 to 363K. The 4 week moving average fell 1,500 to 367K. There’s some risk these figures could trend higher in the coming months due to Sandy, but the long-term trend is definitely lower and consistent with a slowly growing labor market.
- Unit labor costs and productivity showed some potentially positive news for corporate profits as unit labor costs were essentially flat and productivity increase by 1.9%. Corporations are continuing to squeeze every last drop of profit out of their current workforce. That’s good news for profits, bad news for anyone hoping to get hired.
- The monthly ISM Manufacturing report came in at 51.7, slightly higher than last month and still in the expansion range over 50. The details were still consistent with a soft economy. New orders were up to 54, employment was down to 52.1, backlog of orders were down to 41.5. Multiple respondents to the survey mentioned weakness in sales and the global economy.
- Consumer confidence was higher at 72.2 versus last month’s reading of 70.3. The market’s love this statistic as it correlates fairly well with retail sales. I don’t put much emphasis on it.
- Construction spending was up 0.6% after last month’s decline by an equivalent amount. This is consistent with the more upbeat housing views we’ve been seeing more and more of.
All in all, it’s more of the same. Weak economy, slow labor markets, pricing power in the hands of the capitalist class, etc. Not great, but not horrible either….
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.