On November 19th at 8:30A.M. ET initial jobless claims for the week ending 11/14 will be released. Recent statements by Fed Chairman Bernanke indicate that Fed rate policy decisions will be closely tied to the outlook for the US labor market. The Fed is unlikely to hike rates before US employment returns to growth. The unemployment outlook in the US remains weak. Tuesday a number of groups representing African-Americans labor unions Hispanics and others urged Congress to take more action to create jobs. The US unemployment rate is at 10.2% and a number of economists are warning that the unemployment rate could rise to as high as 11% by mid-2010. The unemployment rate for African-Americans is 15.7% and for Hispanics it is 13.1%. Initial jobless claims are seen as a key predictor of the outlook for US unemployment. Since the peak in initial jobless claims at 674k in March the pace of layoffs in the US has slowed considerably. Initial jobless claims for week ending 11/7 dropped from 514k to 502k. The decline in last week's jobless claims partly reflects the impact of seasonal factors and there may be some payback in Thursday's jobless claims report. Initial jobless claims for the week ending 11/14 are expected to rise by 3k to 505k. Although the jobless claims data has been improving a drop to around 400k is needed to suggest that the labor market has stabilized. If Thursday's jobless claims report drops below important 500k it may contribute to an additional boost in the recent rise in risk appetite. Continuing claims will also be released Thursday. Continuing jobless claims have dropped significantly over the last few months. The drop in continuing claims partly reflects the fact large numbers of the unemployed have exhausted their 26 weeks of unemployment benefits. Continuing claims are expected to drop to 5.600mln compared to 5.631mln last month.
Source: Department of Labor
Also on November 19th at 10:00A.M. ET Leading Economic Indicators (LEI) for October will be released. The LEI has risen for the last six months and the coincident index has risen two of the last three months with gains fueled by improvement in US jobless claims and strength of the equity market. An economist at the Conference Board, Ozyildirim says that six month growth rate in LEI has improved to its highest pace since 1983.The LEI is considered a good predictor of whether the economy is expanding or contracting. The Conference Board press release for the September LEI states that the six months of consecutive rises in the LEI report suggest that US recovery is developing. The strength of the recovery remains in question. Recent reports on consumer confidence have shown deterioration and the housing market recovery is slowing as housing starts and building permits dropped sharply in October. This may be an indication that the US rebound is slowing and improvement in the LEI may be reaching a short-term peak. October LEI is expected to rise by 0.5% compared to a 1% rise in September.
Source: The Conference Board
November Philly Fed survey will also be released on November 19th at 10:00A.M. ET. October manufacturing activity in Philadelphia was weaker than the October ISM index and the Empire state survey reported at 11.5 compared to 14.1 in the prior month. New orders however rose by 2.9 points. The November Philly Fed survey is expected to rise to 12.5.