Thursday, June 24, 2021
This week, amid climbing indexes which may open at fresh all-time highs this morning, we’d been fielding economic news in dribs and drabs. Today we get a fully open spigot: Jobless Claims, Durable Goods, Advance Trade in Goods and a revision to Q1 GDP. These reports have not impeded growth in early trading: the Dow is +160 points, the S&P 500 +20, readying for a new all-time high, and the Nasdaq is +80, also at record highs, at this hour.
Initial Jobless Claims, which come out weekly nearly each Thursday morning throughout the year, came in at 411K last week — lower than the upwardly revised 418K the previous week. While a step down, it is still the second-straight initial claims headline back up over 400K, after we saw 3-handles for a couple weeks around Memorial Day. Over the past month, we look to have plateaued right around the 400K mark: not bad considering recent history, but it illustrates we still have a long way to go on employment.
Continuing Claims, which are reported a week in arrears from Initial Claims, reached a new post-Covid low, 3.39 million. This is a notable decline from the slightly upwardly revised 3.53 million reported the previous week. Unlike new claims, continuing jobless claims have come down more profoundly over the past 12 weeks or so: well off the plateau we’d been seeing around 3.6-3.7 million per week.
A preliminary read on Durable Goods for May produced a bounce-back from a negative April number, as expected, though not quite as high as hoped: +2.3%, missing the 2.6% expected but the second-highest read this year behind January’s +3.5%. April’s revision, though still -0.8%, was revised up half a point. That April number is the only negative one over the past year; May’s 2.3% is right near the 12-month average.
Subtracting Transportation costs, we see this figure drop considerably: +0.3%. Ex-Defense, it is +1.7%. We begin to see the story unfold this way, which is why these sub-headlines are so important to the monthly figures. Non-Defense, ex-Aircraft goods (a proxy for “normal” business spending) is where the pain came be located here: -0.1%. However, April’s +2.2% has also been revised to +2.7%, so we see growth on durables tends to average out over time.
Advance Trade in Goods for May fell deeper, to -$88.1 billion — the second-lowest read on record, behind the -$91.9 billion in March. Retail Inventory reached -0.8%, which is the same as the downward revision to the previous month. Exports grew +1.1% for the month. Capital goods rose +4.9% and Industrial Supplies were +1.6%, partly offset by a -4.7% print on auto sales.
Finally, the latest revision to Q1 Gross Domestic Product (GDP) maintained pristine consistency: +6.4%. This was as expected and in-line with the previous read. We do expect Q2 numbers to excel beyond, especially after reading the Fed’s report from last week and listening to testimony from Fed Chair Powell last week and this. In recent years, high GDP growth has been relatively scarce — excepting the Q3 2020 bounce-back from the crater left in Q2 last year, this Q1 print is the strongest we’ve seen in at least seven years.
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