• Home ::
• Fundamental ::
• Analysis Reports ::
• Top Fundamental Stories

• Send
• Print
• Add To
• Rss

Top Fundamental Stories

220fbd4c-8870-4692-93d4-be297adba229

2

0

More Data from the Labor Market Ahead of Tomorrow's Non−Farm Payrolls!

Thu, Nov 5 2009, 12:58 GMT
by ecPulse.com analysis team

ecPulse.com

The Federal Open Market Committee confirmed last night that the benchmark interest rates will remain at exceptionally low levels for an extended period of time, as the ongoing economic weakness continue to weigh down on prices and accordingly the Feds have more room to continue their support for economic growth.

The Feds signaled indeed that economic activity has been picking up recently, however the Feds still admitted that consumer spending will remain under pressure amid rising unemployment, tightened credit conditions, and subdued income growth, and accordingly the Feds still expect economic growth to remain under pressure over the upcoming period.

Meanwhile, more data will be released today from the United States, as the initial jobless claims for the week ending October 31, are expected to drop slightly to 522,000 from the prior reported estimate of 530,000, while continuing claims are expected to drop as well to 5.750 million from the prior reported estimate of 5.797 million.

The U.S. labor market remains on the receiving end of this recession, whereas unemployment continued to rise over the past few months to reach a 26-year high in September at 9.8%, and unemployment is still expected to rise further over the upcoming few months to exceed 10% probably before this year ends.

Yet, activity overall in the United States economy is starting to recover, though over a gradual pace, as so far the manufacturing, the services, and the housing sectors have been proving clear signals that the worst of this recession is indeed over, and that there’s only room for improvement from now on, though we still believe that conditions will be rather challenging over the upcoming period, but still, we should continue to see more signs of stabilization over the upcoming period.

Meanwhile, non-farm productivity is expected to have risen in the third quarter by 6.5% following the prior reported rise of 6.6%, as conditions started to improve during the third quarter and accordingly the economy was able to grow by 3.5%, though growth was mainly attributed to the government’s stimulus packages, but It was able to support economic growth after all.

Moreover, the unit labor costs for the third quarter will be released as well, unit labor costs are expected to drop by 4.2% following the prior reported contraction of 5.9%, as rising unemployment continue to weigh down heavily on overall prices, as productivity remains generally weak, and accordingly we shouldn’t be worried over the outlook for inflation at least over the short term.

The U.S. economy has been able to shake off the worst of this recession so far, however, there’s still a long way to go before conditions are back to normal, as so far the major concern remains the outlook for the labor market, and once we see some improvement in the labor market, we will be able to say that the U.S. economy will be able to fulfill its long term growth potentials.

Meanwhile, Canada will release some fundamentals today. As the building permits index will be released for the month of September, building permits are expected to have risen by 1.6% following the prior reported rise of 7.2%, as it seems the Canadian economy is also on its way to recover from the worst recession since WWII.

The Bank of Canada expects the Canadian economy to be able to grow over a strong pace during 2011, which clearly indicates that the BOC expects 2010 to be a recovery year as well, Canada will also release the Ivey PMI for the month of October, Ivey PMI is expected to drop slightly to 58.0 from 61.7, though the index is expected to slowdown slightly, yet it still signals expansion.

Published on  Thu, Nov 5 2009, 12:58 GMT