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Jobless Claims, Goods Orders, Airline Metrics Up Ahead of Holiday

Wednesday, November 23, 2022

Pre-market futures are flat at this hour, following the release of economic and employment data that continues to suggest the U.S. economy is on sound footing — or at least not on the very brink of recession, as many analysts had forecast by now. We’re also embarking on Thanksgiving travel weekend, so trading volumes are depleted (and are expected to be on Friday’s half-day session, as well).

Initial Jobless Claims last week came in higher than expected: 240K, the most for a weekly tally since August and +17K from the previous week’s upwardly revised 223K. We’re off the July peak of 261K, but certainly higher than the 50-year lows we were seeing back in April of this year, when we were seeing reports down in the 160Ks. New claims are creeping up; will they continue on this trajectory, or will they ebb back down again?

Continuing Claims give us a bigger picture of the labor market, and here we see a rise week over week, as well: 1.551 million is notably higher than the 1.51 million reported a week ago. Longer-term jobless claims are reported a week behind new claims, so we may expected these numbers to keep moving higher in the next week. That said, we don’t appear to be in any pocket of labor market softness that would augment the Fed’s trajectory for interest rate increases — not yet.

Next week will tell us more, not only with fresh weekly claims data but with a private-sector monthly employment report from ADP ADP and next Friday’s non-farm payrolls for November. For October, we saw gains of 239K new jobs filled on the ADP report and 261K for non-farm payrolls. These continue to represent a healthy labor market — will we start to see evidence of this eroding? Analysts will certainly be paying attention.

Durable Goods Orders for October doubled expectations on headline: +1.0% versus +0.5% estimated. This is the highest print since June’s +2.3% and more than 3x higher than September’s +0.3%. Ex-transportation, +0.5% is the number — well above the 0.0% analysts were looking for. This is the highest read since March. Not exactly a ringing endorsement for a pending recession.

Non-defense, ex-aircraft orders — a proxy for “normal” business investment (computers, furniture, office space, etc.) swung to a positive +0.7% from the previous month’s -0.8%. Shipments, which fold into other economic data elsewhere, came in at a higher-than-expected +1.3%. So the business of trade is picking up; this is good news for everything except inflation metrics.

After the opening bell today, we’ll also get new S&P PMI data on both Manufacturing and Services for the month of November. Both appear headed subtly in opposite directions, but both look to continue to hover around the 50-level that separates expansion from contraction. Also a new University of Michigan consumer confidence survey is out later this morning, and the minutes from the latest Fed meeting are out this afternoon.

A quick glance at the current travel industry in the U.S. — with so many people on the go for the holiday — shows airlines on sounder footing than they’ve been in the past few years: staffing is +6.4% from a year ago, +2.7% from the previous comparable year of 2019. Flights have been reduced, but resources — attendants, mechanics, etc. — have increased. Also, jet fuel is down -37% versus Thanksgiving Week a year ago. Thus, major airlines, which are mostly down year-to-date but nowhere near Big Tech, are sitting pretty from this vista.

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