It's The Economy Stupid: Productivity, Jobless Claims and Such

Okay, here’s ECONOMICS FOR DUMMIES:  Job Cuts UP (Bad), Consumer Confidence DOWN (Bad), Productivity DOWN (Bad), Labor Costs UP (Bad), Initial Jobless Claims DOWN (Good), Continuing Jobless Claims DOWN (Good).

 

 

Economic Event	Period	Economic Survey	Actual Reported	Original Prior	Revised Prior
Challenger Job Cuts YoY	JAN	-	38.9%	30.6%	-
RBC Consumer Outlook Index	FEB	-	45.10	45.80	-
Nonfarm Productivity	4Q P	0.8%	0.7%	2.3%	1.9%
Unit Labor Costs	4Q P	0.8%	1.2%	-2.5%	-2.1%
Initial Jobless Claims	JAN 28	371K	367K	377K	379K
Continuing Claims	JAN 21	3535K	3437K	3554K	3567K

 

PRODUCTIVITY

 

The productivity of U.S. workers rose at a slower pace than in the prior three months, perhaps showing companies are reaching the limits of how much efficiency they can squeeze from existing workforces.

 

The measure of worker output per hour increased at a 0.7 percent annual rate following a 1.9 percent gain in the prior three months, figures from the Labor Department showed today in Washington. Expenses per employee climbed at a 1.2 percent rate after dropping 2.1 percent in the third quarter.

 

It appears that businesses in the U.S. that are growing more confident about the economy may be hiring more workers after the recession and its aftermath led them to search for ways to lift efficiency without creating new jobs.

 

As job growth picks up, we’re probably going to see some slowing in productivity.

 

JOBS

 

Applications for unemployment insurance payments dropped by 12,000 to 367,000 in the week ended Jan. 28.  The median forecast of 46

economists in a Bloomberg News survey projected 371,000 Initial Jobless Claims.

 

The S&P 500 has rallied 21 percent from its 2011 low in October amid signs that the U.S. economy was weathering Europe’s debt crisis. Government data tomorrow is forecast by economists to show the U.S. added 145,000 jobs in January and the unemployment rate held at a three-year low of 8.5 percent.  That’s the questimate, we’ll see tomorrow what’s reality.

 

CORPORATE EARNINGS

 

Earnings beat projections at 66 percent of the 211 companies in the S&P 500 that reported quarterly results since Jan. 9th. Profits probably grew 4.6 percent in the fourth quarter, according to a Bloomberg survey of analysts. The projection has fallen from 6.2 percent at the end of last year.

 

So the earnings news is good, but not as good as it has been.

 

 

John Broussard

Assistant State Treasurer

Chief Investment Officer

State of Louisiana

Department of the Treasury