US: Strong economic releases - Nomura

Research Team at Nomura, notes that the US initial jobless claims were 262k in the week ending 13 August (the BLS survey reference week), a 4k decline from the prior week's figure of 266k.

Key Quotes

“In the week ending 6 August, continuing claims were 2175k, a 15k increase from the prior week's revised figure of 2160k (previously reported as 2155k). Claims data remain steady at historically low levels, implying very limited layoff activity in the US labor markets.

Philly Fed survey: The headline index improved to 2.0 in August from -2.9 in July, in line with market expectations (Nomura: 3.0, Consensus: 2.0). Although the headline index returned to positive territory, the underlying details were broadly weak.

The new orders subindex dropped over 18 points to -7.2 from 11.8 while the unfilled orders subindex declined nearly 17 points to -15.0 from 1.9. Employment indicators were also very weak. The number of employees’ subindex declined sharply to -20.0, the lowest level since July 2009. The average workweek subindex fell to -11.5 from -3.6, which suggest production activity slowed in August. But one bright spot was shipment activity, which picked up further as the subindex improved to 8.4 from 6.3.

The 6-month-ahead section of the report showed somewhat better optimism from respondents. The general business activity index increased to 45.8 from 33.7 while the outlook for new orders and shipments improved notable over the month. Also important, the capital expenditures spending index improved further in August, which is a positive sign that business spending should gradually pick up later in the year.

Overall, the August report was somewhat disappointing given that most of the details showed weak demand and production activity. This report contrasts the Empire State manufacturing report that showed some improvement in business activity in August. But the outlook appears to have improved for many businesses in the Philly region, so better activity might be in the horizon.”