Thursday, September 15, 2022
When we see a litany of economic prints in a particular morning, in lieu of providing extensive context, we mostly just spit out the figures and let investors make of them what they will. This morning is one of those: no fewer than five major metrics are hitting the tape an hour ahead of the opening bell — most of which can be construed as relatively good news.
Starting with Initial Jobless Claims, which come out nearly every Thursday morning, we see a surprise drop to 213K new claims, lower than the 225K expected and the downwardly revised 218K. We’d have to go back to the end of May to find initial jobless claims this low, week over week. In fact, it looked for a few weeks like we were plateauing at around 240-250K new claims; anything lower than this is positive for the labor market.
Continuing Claims, coming out a week in arrears from initial claims, are also down somewhat unexpectedly: 1.40 million longer-term jobless claims are not only below expectations and the lowest print since mid-July, but the revision to the previous week went down 5000 claims to 1.40 million, as well. Again, good news for the domestic workforce — though not something that will move the Fed ahead of its next monetary policy meeting.
Retail Sales for August actually came in higher: +0.3% versus 0.0% expected on headline. This digs us partially out of the big downward revision for July, which went from 0.0% originally posted to -0.4% this morning. If we strip out volatile month-over-month auto prices, this number flips to -0.3%, down from the downwardly revised 0.0% the previous month. This suggests a profound affect of vehicle sales last month in overall Retail Sales metrics.
Import Prices for August came in slightly better than expected: -1.0% versus -1.2%, and an improvement on the -1.5%, which was a slight downward revision from the initial print. Ex-petrol, this figure reaches -0.2%. For Exports, month over month came in at -1.6%, roughly half of the previous initial read of -3.3%. This is another key metric the Fed watches when deciding on interest rate policy.
Year over year, Imports are at a still-high +7.8% (though finally we’re seeing a 7-handle somewhere, unlike in CPI and PPI figures earlier this week), down 100 basis points (bps) from the +8.8% originally printed. Exports year over year are even higher: +10.8% — down from the +12.5% estimate and the +12.9% last time around. So we continue to move in the right direction, but clearly we’re still on a lofty perch.
Philly Fed and Empire State manufacturing surveys for September are also out this morning, with the Philadelphia read a much weaker -9.9 from +2.3 expected, and an even steeper drop from 6.2 reported for August. The New York State print, at -1.5, was still much better than the -13.8 estimate and -31.3 posted last month. While both of these surveys are notable for their relative volatility, we notice Empire State hasn’t put out a positive manufacturing report since July.
Pre-market futures went from moderately negative ahead of these releases to flattish closer to the opening bell. Investors have by now come to terms with a 75 bps interest rate hike next Wednesday, which will bring the lower end of the Fed funds rate to a tidy 3.00%. The question then will be how much higher the Fed cranks the wheel in the final two meetings before the end of the year.
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Lots of Data, Most of It Better: Jobless Claims, Retail & More
Thursday, September 15, 2022
When we see a litany of economic prints in a particular morning, in lieu of providing extensive context, we mostly just spit out the figures and let investors make of them what they will. This morning is one of those: no fewer than five major metrics are hitting the tape an hour ahead of the opening bell — most of which can be construed as relatively good news.
Starting with Initial Jobless Claims, which come out nearly every Thursday morning, we see a surprise drop to 213K new claims, lower than the 225K expected and the downwardly revised 218K. We’d have to go back to the end of May to find initial jobless claims this low, week over week. In fact, it looked for a few weeks like we were plateauing at around 240-250K new claims; anything lower than this is positive for the labor market.
Continuing Claims, coming out a week in arrears from initial claims, are also down somewhat unexpectedly: 1.40 million longer-term jobless claims are not only below expectations and the lowest print since mid-July, but the revision to the previous week went down 5000 claims to 1.40 million, as well. Again, good news for the domestic workforce — though not something that will move the Fed ahead of its next monetary policy meeting.
Retail Sales for August actually came in higher: +0.3% versus 0.0% expected on headline. This digs us partially out of the big downward revision for July, which went from 0.0% originally posted to -0.4% this morning. If we strip out volatile month-over-month auto prices, this number flips to -0.3%, down from the downwardly revised 0.0% the previous month. This suggests a profound affect of vehicle sales last month in overall Retail Sales metrics.
Import Prices for August came in slightly better than expected: -1.0% versus -1.2%, and an improvement on the -1.5%, which was a slight downward revision from the initial print. Ex-petrol, this figure reaches -0.2%. For Exports, month over month came in at -1.6%, roughly half of the previous initial read of -3.3%. This is another key metric the Fed watches when deciding on interest rate policy.
Year over year, Imports are at a still-high +7.8% (though finally we’re seeing a 7-handle somewhere, unlike in CPI and PPI figures earlier this week), down 100 basis points (bps) from the +8.8% originally printed. Exports year over year are even higher: +10.8% — down from the +12.5% estimate and the +12.9% last time around. So we continue to move in the right direction, but clearly we’re still on a lofty perch.
Philly Fed and Empire State manufacturing surveys for September are also out this morning, with the Philadelphia read a much weaker -9.9 from +2.3 expected, and an even steeper drop from 6.2 reported for August. The New York State print, at -1.5, was still much better than the -13.8 estimate and -31.3 posted last month. While both of these surveys are notable for their relative volatility, we notice Empire State hasn’t put out a positive manufacturing report since July.
Pre-market futures went from moderately negative ahead of these releases to flattish closer to the opening bell. Investors have by now come to terms with a 75 bps interest rate hike next Wednesday, which will bring the lower end of the Fed funds rate to a tidy 3.00%. The question then will be how much higher the Fed cranks the wheel in the final two meetings before the end of the year.
Questions or comments about this article and/or its author? Click here>>