The new year’s off to an encouraging start with economic news. Today’s updates on jobless claims and the ISM Manufacturing Index suggest that moderate growth was still bubbling in the final month of 2013. Although December’s macro profile is still largely a mystery, the numbers du jour imply that last year’s finale will compare favorably with recent history when the full set of data is published in the weeks ahead.
New filings for jobless claims inched lower again last week, dipping 2,000 to a seasonally adjusted 339,000 for the week through December 28. Although that’s still elevated compared with the post-recession low of 294,000 set back in September, claims are again falling. Today’s retreat is the second weekly decline in a row—a trend we haven’t seen since November. A more persuasive sign of optimism: claims fell last week by nearly 9% vs. the year-earlier level. For the moment, it appears that this leading indicator is again signaling that the labor market will continue growing for the near term. The warnings signs that we saw earlier this month for this series now looks like another false alarm.
Meantime, the manufacturing sector is humming along nicely, according to the latest report from the Institute for Supply Management. Although manufacturing growth for December was a bit softer than expected, the 57.0 reading for last month equates with a healthy rate of expansion (readings above the neutral 50.0 mark equate with growth). Keep in mind that the employment and new orders components in today’s ISM report posted slightly stronger numbers, suggesting that manufacturing’s growth is broad and deep.
The economy’s positive momentum has been conspicuous for some time, as recent history reminds. In last month's update of the Economic Trend & Momentum indexes, business cycle risk remained low through November and the near-term projections imply that more of the same is on tap. Today’s twin updates certainly offer no reason to change that outlook. It remains to be seen if the year ahead will bring a stronger rate of jobs creation, but it's a bit easier to think that's a plausible scenario after looking at today's numbers.
Yes, it’s been a good year so far for economic news.