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New Econ Reports Keep Recession at Bay

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We pack a lot more economic and earnings information into the back-end of this holiday-shortened trading week, with jobless claims, housing data and manufacturing in the city of Philadelphia leading the pack of new reports, plus several more Q4 earnings releases ahead of the bell. Pre-market indices like the news, for the most part: aside from the Dow, which is -57 points (-0.15%) at this hour, the S&P 500 is +0.40%, the Nasdaq is +0.82% and the small-cap Russell 2000 is +0.59%.

Initial Jobless Claims for last week dropped below 200K for the first time since February of last year: 187K, the smallest amount of new jobless claims since January of last year. It’s also -16K below the already low (though slightly upwardly revised) 203K the previous week. This is as clear a sign as any — and as granular an economic print as we’re likely to see anywhere — that domestic employment continues to roll along strongly, as robust an indication that a recession remains off the foreseeable horizon.

Continuing Claims, which a couple months ago looked like it was heading to 2 million in short order (1.925 million in mid-November), fell back meaningfully again to 1.806 million — the lowest print since October of last year, prior to the ramp-up in longer-term jobless claims. Gone are the half-century lows of 1.6 million we were seeing during the Great Reopening, but this morning’s tally is beneath the already-low 1.832 million revision for the previous week. Again: a robust job market. This is currently the case for the short-term and long-term.

Housing Starts for December grew above expectations: 1.46 million versus expectations of 1.43 million. This figure comes in below the previous month’s 1.56 million, which was the strongest number on new starts in a year and a half. The August low of 1.305 million looks to have been an outlier in the grand scheme of things, or at least the 12-month cycle. In fact, 1.46 million is the third-highest print of the year.

Building Permits — a proxy for future starts — also came in ahead of expectations: 1.495 million versus 1.48 million anticipated, and notably higher than the upwardly revised 1.467 million the previous month. These figures together also point to a strengthening market for homebuilders, especially as existing homes are still slow to go on the market with still-high mortgage rates. Homebuilding also improves a wide swath of the domestic economy as a whole: construction workers, lumber, windows, roofing, flooring, appliances, etc.

January’s Philly Fed survey came in negative for its 12th month in the past 13: -10.6, beneath the expected -8.0. This was an improvement on the previous month’s -12.8, which happens to be the trailing 12-month average on this manufacturing index for the sixth-largest city in the U.S. The only positive print in the last year-plus on this survey was +7.7 back in August of last year. This Philly Fed was still better than the Empire State index reported earlier this week, which fell off the table. But both manufacturing metrics have clearly seen better days. It stands in clear contrast with the rest of today’s economic data.

Q4 earnings gives us Cleveland-based KeyCorp (KEY - Free Report) , which missed big on its bottom line — earnings of $0.03 per share versus expectations of $0.22 — but outperformed slightly on its top line: $1.538 billion versus 1.52 billion expected. Meanwhile, Fastenal (FAST - Free Report) , a deceptively important company in that it is a gauge for construction and manufacturing as it provides fasteners for hundreds of other companies, beat earnings estimates by a penny to 46 cents per share, with revenues of $1.758 billion outpacing the $1.75 billion in the Zacks consensus.

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