Two economic reports out today show evidence of an improving economy. No, not the stock market. These two reports deal with the real thing, jobs and the health of the manufacturing sector.
First jobs:
The rate of layoffs continues to ease as initial jobless fell 10,000 in the Oct. 10 week to 514,000 (prior week revised from 521,000). Continuing claims also fell, down 75,000 to a sub-6 million level at 5.992 million in data for the Sept. 26 week. The unemployment rate for insured workers, in contrast to the overall unemployment rate, continues to slip, down another tenth to 4.5 percent. Levels in this report are the lowest since the first quarter.
And manufacturing, an improvement in an index which foretells increased hiring down the road.
The month-to-month rate of increase is picking up steam quickly in the New York manufacturing region. The Empire State general business conditions index jumped to 34.57 in today's October report vs. 18.88 in September. The index first popped over the break-even level of zero in August and has since indicated, again, rising rates of month-to-month expansion.
New orders have been mirroring the overall index, now at 30.82 and pointing to extended gains for overall activity in the months ahead. Unfilled orders have finally popped over zero, now at 2.60 and reflecting the increasing level of activity that is backing up work. Shipments really jumped in the month to 35.08 vs. September's 5.34, helping to drive up employment to 10.39 in a reading that ends a long string of declines. The workweek also rose sharply, to 20.78 vs. 5.95.
The Philadelphia Fed Survey will be coming out shortly. The consensus is for a level between 10 and 15. I will post an update when that data comes out.
Here is what the survey measures:
The general conditions index from this business outlook survey is a diffusion index of manufacturing conditions within the Philadelphia Federal Reserve district. This survey, widely followed as an indicator of manufacturing sector trends, is correlated with the ISM manufacturing index and the index of industrial production.
Yes these reports have their shortcomings. For instance only about 40% of workers are covered by unemployment insurance. But the important thing is to look at the trends within what they do cover, and they are showing improvement.
I'm not an economist but I generally agree with our former colleague Bonddad on the future of the economy. It's not exactly 'Happy Days are here again' but maybe we can squeeze out the ghost of a smile.
Links to the reports
Jobless Claims
Empire State Manufacturing Survey
UPDATE: The Philadelphia Fed Survey is in. It's not quite as rosy as the other reports but there is still room for optimism.
Business conditions are improving for Mid-Atlantic manufacturers but only gradually. The Philadelphia Fed's general business index came at 11.5 in October, safely above the break-even zero level but indicating a slower rate of month-to-month increase compared to September's 14.1 level. But new orders did accelerate slightly, to 6.2 vs. 3.3 in September in a reading that points to extended overall improvement in business conditions for the months ahead.