US Initial Unemployment Claims Improve, Durable Goods Orders Stumble

Highlights

• Initial claims fall to 230,000, down by 10,000.
• 4-week moving average rises to 236,750.
• July orders drop by 5.2%, totaling $285.9 billion.
• Transportation equipment plummets by a steep 14.3%

Initial Claims: A Positive Shift

In the week ending August 19, initial claims for unemployment benefits fell to 230,000, marking a decrease of 10,000 from the preceding week. However, the prior week’s numbers were adjusted upward, from 239,000 to a revised figure of 240,000.

4-week Moving Average: A Slight Uptick

While the initial claims showed an optimistic decline, the 4-week moving average edged up to 236,750, a rise of 2,250. The average from the week before was marginally revised from 234,250 to 234,500, hinting at a slightly less robust job market.

Insured Unemployment Rate: On a Downward Trend

The insured unemployment rate, a metric that provides a more comprehensive view of the job market, saw a favorable dip. For the week ending August 12, the rate dropped by 0.1 percentage points, settling at 1.1%.

Unemployment Numbers and 4-week Average: Mixed Signals

In the same period, the number of insured unemployed individuals decreased to 1,702,000, a decline of 9,000. Nevertheless, the 4-week moving average for this metric rose to 1,697,250, indicating subtle fluctuations in the employment scenario.

Weekly Unemployment Claims Outlook

While the decline in initial claims and the insured unemployment rate paints a promising picture, the upward trend in the 4-week moving averages suggests caution. It remains essential to monitor these indices closely to gauge the health of the U.S. job market truly.

Durable Goods Orders Decline in July

The U.S. Census Bureau reported a notable dip in new orders for manufactured durable goods in July, halting a four-month rising streak.

Overall Decline

New orders in July dropped by $15.5 billion, representing a 5.2% decrease, bringing the total to $285.9 billion. This downturn comes on the heels of a 4.4% uptick witnessed in June.

Transportation’s Role

A significant factor in this decline was the transportation equipment sector. Despite four straight months of gains, it plummeted by $16.4 billion in July, marking a steep 14.3% decrease to stand at $98.7 billion.

Exclusions Paint a Mixed Picture

When sidelining transportation from the equation, new orders actually saw a modest 0.5% increase. However, taking defense out of the mix results in a 5.4% decline in new orders.

Durable Goods Outlook

With transportation equipment driving the drop, concerns rise about the sector’s volatility and its potential impact on future manufacturing metrics. Investors and policymakers will be keeping a close eye on these numbers, gauging the health and direction of the U.S. manufacturing sector.