'Disappointing' data suggest slowing recovery

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After a modest two-week streak of initial jobless claims falling, and one week below the 1 million level, the latest report took an upward turn.

Initial claims rose to a seasonally adjusted 1.106 million in the week ended Aug. 15 from the previous week’s upwardly revised level of 971,000 million, originally reported as 963,000, the Labor Department said Thursday.

Economists polled by IFR Markets projected 893,000 claims in the week.

"New unemployment claims have remained remarkably elevated for 22 consecutive weeks, coinciding with the COVID-19 pandemic,” said Mark Hamrick, senior economic analyst at Bankrate. "By way of comparison, in the first 11 weeks of the year — before the pandemic and lockdown restrictions took hold — the average number of new weekly jobless claims was just 218,000. Also, the latest number of new claims is five times that pre-pandemic weekly average."

Continuing claims fell to 14.844 million on the week ended Aug. 8 from a downwardly revised level of 15.480 million a week earlier, first reported as 15.486 million.

"The only real mitigating key data point here is that continuing claims slipped to below 15 million,” he said. "It remains noteworthy that there have been no recent signs of any progress on negotiations to extend relief legislation when the Labor Department says a total of 28 million Americans were receiving some kind of unemployment assistance for the week ending August 1."

The states with the largest rise in claims for the week ending Aug. 8 were: Nevada (4,028), Puerto Rico (3,601), Kansas (2,248), Hawaii (247) and South Dakota (198), while the states with the largest drops were: New York (21,366), California (19,534), Florida (16,702), Georgia (11,596), and Virginia (10,653).

In the not seasonally adjusted advance state claims, showed claims rising in New York and more than half the states. "One has to be disappointed to see the rebound in new claims for unemployment benefits, including gains for several key states including New York, New Jersey, Texas and Florida,” Hamrick said. "While the Federal Reserve responded broadly to the economic downturn, just released minutes from the late July meeting indicate some members of the Federal Open Market Committee discussed the need for further fiscal policy support, as they put it, to encourage further improvement in the job market. In other words, they were calling on Congress and the president need to pass another round of legislation."

Philly Fed manufacturing index
Activity in the manufacturing sector in the Philadelphia region “continued to expand,” with "most" of the components remaining above zero, according to the Federal Reserve Bank of Philadelphia's Manufacturing Business Outlook Survey, released Thursday.

The general activity index dropped to 17.2 in August from 24.1 in July.

Economists expected a 20.5 reading.

The new orders index fell to 19.0 from July’s 23.0 level. Shipments decreased to 9.4 from 15.3, while unfilled orders reversed to negative 0.6 from positive 3.9.

Delivery times climbed to positive 7.3 from negative 6.4, while inventories narrowed to negative 1.9 from negative 11.8.

Prices paid slipped to 15.3 from 15.7 and prices received gained to 12.4 from 11.5.

The number of full time employees fell to 9.0 from 20.1, while the average employee workweek dropped to 11.30 from 17.2.

The six months from now indexes show respondents “remained optimistic” about future growth.

The future general business activity index for the region increased to 38.8 from 36.0.

Leading indicators
The Leading Economic Index gained 1.4% in July to 104.4, on the heels of a 3.0% rise in June and a 3.1% jump in May, the Conference Board reported Thursday.

Economists polled by IFR Markets expected a gain of 1.1%.

The coincident index rose 1.2% in July to 99.2, after gains in June and May of 2.9% and 2.4%, respectively.

The lagging index fell 1% in July to 109.2, after a 2.3% dropping in both June and May.

“The U.S. LEI increased for the third consecutive month in July, albeit at a slower pace than the sharp increases in the previous two months,” said Ataman Ozyildirim, senior director of economic research at The Conference Board. “Despite the recent gains in the LEI, which remain fairly broad-based, the initial post-pandemic recovery appears to be losing steam. The LEI suggests that the pace of economic growth will weaken substantially during the final months of 2020.”

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Economic indicators Jobless claims Federal Reserve Bank of Philadelphia Manufacturing industry