Thursday, January 31, 2013

Economic Data Update ...

Initial Jobless Claims

This morning's initial jobless claims number was well above the consensus; 368K versus 350K.  It also represents a huge 38K increase from the prior week.  Without anything unusual impacting that number, it may indicate that the employment picture for the month of Feb. has gotten off to a bad start.  We note that this initial jobless claims data did not impact tomorrow's to-be-released Jan. employment report.  The surveys, on which the employment report is based, were conducted before this latest sample of jobless claims was taken (which was last week).

Personal Income & Outlays (December)

As we assumed earlier this week, personal income grew more than expected in the latter part of Q4.  It went up 2.6% in Dec., significantly above the Street's 1.0% estimate.  In terms of Y/Y, personal income grew 6.9%.  However, we note that a lot of the growth in December was due to a huge uptick in special dividend and bonus payments by companies in fear of higher taxes and the fiscal cliff in 2013.  For this reason, this type of growth is not likely to continue.

Consumer spending in Dec. was up 3.6% Y/Y, while the Y/Y change in headline and core PCE Price indexes, 1.3% and 1.4%, respectively, both grew 10bps less than expected.  This could be considered good news by the pro-QE and pro-Bernanke folks, especially after the latest disappointing GDP report. 

Chicago PMI (January)

The Chicago PMI of 55.6 comfortably beat Street's 50.0 estimate.  All key sub-indexes increased nicely, with production, new orders, and employment being the notable ones.  We are not yet sure if this report will have an impact on estimates of tomorrow's ISM manufacturing report, but we did not change our projection.  We still expect a slight contraction, 49.0, versus the Street's pre-Chicago PMI estimate of 50.0.

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