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Jobless Claims Rebound; Retail Sales, Philly Fed Surprise Up

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Thursday, September 16, 2021

Thursday morning almost always brings us fresh weekly jobless claims data, and today is no exception. We also see new economic prints in retail and productivity from the 6th largest city in the U.S. This week has actually been ripe with econ data, with CPI, imports/exports, Empire State and industrial productivity all having been reported in just the past few days.

Initial Jobless Claims bounced back up 20K to 332K — higher than the 318K or so expected by analysts. This follows the post-Covid low in this series, which itself was upwardly revised from the 310K originally reported. We’re still on the low end of the spectrum, however: the 12-week trailing average is currently 366K new jobless claims filed per week. Over the past three weeks, this figure shrinks to 330K.

Continuing Claims, reported a week in arrears from Initial Claims, reached another post-pandemic low to 2.665 million, down nicely from the 2.78 million reported the previous week. Just a couple months ago, we were still up around 3.3 million longer-term jobless claims per week, and going back to Thanksgiving of last year we were still seeing upwards of 6 million longer-term claims. So clearly these numbers are all pointed in the right direction.

The question becomes whether bouncing off the low new claims read last week is where we can expect to remain for the foreseeable future. Of course, we should see Retail employment start to pick up ahead of holiday shopping season — provided there is enough inventory to sell in our stores then; supply constraints are very real currently — but we also stand to lose Construction work as winter months creep up.

The advance read on Retail Sales for August did this morning what Import Prices did yesterday: provided a mirror image in monthly gains from what was expected to be a loss. In Retail Sales’ case, it was even by a bigger margin of swing to the positive: +0.7% versus -0.7% expected. That this is an early read allows for revisions going forward, but a 140-basis-point move is significant for month over month retail gains.

Ex-autos, whose high sticker prices have a way of skewing overall data, was even better: +1.8% versus +0.2% expected. Ex-autos & gas rose +2%. Strength in Retail is what this demonstrates; pent-up demand looks finally being sated, at least of last month. It would also suggest that the Delta variant of the coronavirus has hit a wall, basically where vaccination rates are at optimum levels, and Retail is able to blossom.

That said, the revised data in Retail Sales has given back some of these big gains: headline for July had been a weak -1.1%, now it’s revised down to -1.8%. The ex-autos numbers shows much the same thing: originally -0.4%, today this figure is -1.0%. The good news here is that’s data from the past, back when the Delta variant represented more of a clear and present danger to the U.S. economy than it currently does.

And the Philly Fed survey brought its own big upward surprise this morning: 30.7 for September is well beyond the consensus 18.9 expected. This is up from an unrevised 19.4 reported for August, and brings the productivity levels for the city of Philadelphia to their highest since June, which was also 30.7. This report echoes the Empire State survey yesterday, also for September, whose headline number jumped almost double expectations.

Clearly, the economy is back. Market futures are trading higher following these releases, as they did yesterday, but have yet to push into positive territory except for the Dow. The fear of a new nationwide Covid shutdown looks silly from this perch. What market participants — as well as American consumers — must look at now is if there will be enough goods and services to go around, near-term. Which is a pretty good problem to have, as far as problems go.

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