Data was again busy this morning due to the holiday shortened trading week.
Durable goods orders fell more than expected at -0.6%. Analysts had expected a 0.5% rise. This data is notoriously volatile, however so it’s important not to read into this too much. The clear trend in durable goods orders is higher. Econoday has the details:
The outlook for manufacturing cooled a bit in October. New orders for durable goods in October fell 0.6 percent, after a revised 2.0 percent rebound in September. The drop in October was well below the market forecast for a 0.5 percent boost. Excluding the transportation component, new durables orders fell 1.3 percent, following a 1.8 percent jump in September.
The drop in new orders was led by machinery which fell a monthly 8.0 percent, followed by a 2.1 percent decrease in computers & electronics. Also declining were communications equipment and “other” durables. Partially offsetting were gains in primary metals, fabricated metals, electrical equipment, and transportation.
Data on the consumer side was a bit more mixed. The headline figure on personal income and spending appears somewhat good, but it’s important to note that this data includes the last of the cash for clunkers boost. Wages and salaries were flat on the month.
The Michigan Consumer Sentiment index was in-line with expectations at 67.4.
The news of the day, without a doubt, is a dramatic improvement in jobless claims. Econoday has the details:
Improvement in initial claims is picking up steam in what points to lower payroll losses for November’s employment report. First time claims fell 35,000 in the Nov. 21 week to 466,000 (prior week revised 4,000 lower). The four-week average also broke below 500,000, down 16,5000 to 496,500. Continuing claims are also falling, down 190,000 to 5.423 million in data for the Nov.. 14 week, but here the change also reflects the expiration of benefits. Those receiving extended benefits fell 34,600 to 539,500. Continuing claims may be clouded but initial claims offer perhaps more reason for optimism than any other piece of economic data.
All in all it’s a bit of a mixed bag, but the improvement in the jobs market should overshadow everything. This will be seen as a most welcome trend for the market.
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.