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US: Labour market deterioates quickly

Fri, Nov 21 2008, 08:38 GMT
by KBC Market Research Desk

KBC Bank

In the week ended November 15, initial claims rose 27 000 from a downwardly revised 515 000 to 542 000, while the consensus was looking for a slight drop (505 000). Continuing claims, reported with a one-week lag, rose 109 000 from 3 903 000 to 4 012 000, which is significantly above the consensus estimate of 3 900 000 and is the highest level since December 1982. While the data might be distorted due to Veteran’s day and seasonal adjustment problems, these figures suggest that conditions in the labour market are deteriorating sharply and quickly and no improvement is expected in the coming weeks. Current levels point to monthly payrolls contraction of + 300 000.

The leading indicators plunged 0.8% M/M in October and the previous figure was downwardly revised from 0.3% M/M to 0.1% M/M. The details show a sharp drop in stock prices (-0.89% M/M), building permits (-0.35% M/M), consumer expectations (- 0.29% M/M) and pace of deliveries (-0.22% M/M); whereas M2 money supply (0.71% M/M) and the interest rate spread (0.29% M/M) noted considerable increases. The Conference Board added that the economy is unlikely to improve soon and economic activity may contract further in the near term.

The Philly Fed dropped from -37.5 in October to -39.3 in November, while the consensus was seeking for a slight improvement (-35.0). New orders (-31.4 from -30.5), unfilled orders (-29.1 from -27.5) and average employee workweek (-19.7 from -18.4) all worsened, while shipments were unchanged (at -18.8). Number of employees deteriorated sharply from -18.0 to -25.2. Both prices paid (-30.7 from 7.2) and prices received (-15.5 from 5.3) showed remarkable plunges. The latter nurtures underlying fears that the deflationary tendencies will accompany the deep recession.

Other: Strong UK retail sales figure, but weak details

In the UK, retail sales dropped 0.1% M/M in October, while the consensus was looking for a decline of 0.9% M/M. The previous figure was downwardly revised from - 0.4% M/M to -0.5% M/M. On a yearly basis, retail sales rose 1.9% M/M in October, after a downwardly revised 1.7% M/M. Looking at the details, food stores rose 1.0% M/M, while textile and clothing (-1.5% M/M), household goods (-3.4% M/M) and nonfood stores (-1.1% M/M) showed significant declines. Although the headline figure is better than expected, the details show a bleak picture as consumers are delaying their spending.

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Published on  Fri, Nov 21 2008, 08:43 GMT