Investors got a triple shot of good economic news this morning.
The Labor Department reported that initial unemployment claims dropped by 20,000. First time claims for unemployment benefits came in at 512,000 for the week ending October 31. Continuing claims also dropped, falling by 68,000 to 5.75 million.
The consensus estimate for initial claims was 522,000, with estimates ranging from 510,000 to 535,000. Thus, the actual number came in on the optimistic side of analyst estimates.
The news, while good, wasn't all positive. Only two governmental bodies, Indiana and Puerto Rico, showed a drop in claims of more than 1,000. That was countered by the 12 states that showed an increase of more than 1,000 claims, led by California's 14,394.
The drop in initial claims, however, prompted some economists to say that the recovery has taken hold and that the trend for unemployment claims is downward. This indicates that the job market, while still weak, is strengthening.
Those who are not among the 7.2 million people who lost their jobs since the recession began in December of 2007 are doing their jobs more efficiently. The Labor Department's productivity report showed that productivity soared at a 9.5 percent annual rate in the third quarter. This was the biggest gain in productivity since the third quarter of 2003, when it jumped by 9.7 percent.
The gains in productivity didn't come as a result of an increase in production. In fact, production dropped by 3.5 percent. However, that was offset by a decrease in hours worked of 7.5 percent. That drop in hours worked was the biggest seen by the Labor Department since it began keeping records in 1948.
Once again, productivity gains were far better than the consensus estimate of a 6.5 percent increase. Estimates ranged from 3.8 percent to 8.5 percent. Thus, the actual number came in way above even the most optimistic estimate.
The gain in productivity is seen as allowing the Fed to keep interest rates at record low levels, since it means that inflation is unlikely to rear its ugly head. It also means that it's likely that employers will have to resume hiring soon, because they are close to getting as much as they can out of their employees. Further, it's likely that company profits will continue to grow, as they're able to generate the same amount of revenue while spending less.
Finally, retail sales figures from a number of chain stores showed some improvement in the month of October. October is normally a weak time period for retailers, as it falls in between the back to school and critical holiday season. However, cooler than normal weather and some demand on the part of the consumer combined to cause sales to increa
se by about two percent.
Teen focused retailers like Abercrombie & Fitch and American Eagle Outfitters posted sales declines. But even there, some retailers, such as the Buckle and Aeropostale were able to increase their sales. Not surprisingly, with consumer spending remaining weak, discounters like BJ's Wholesale Club and Costco posted gains.
Department stores were mixed, with companies like Macy's and J.C. Penney showing declines in sales. But Nordstrom posted a better than expected gain and Kohl's, while reporting worse than expected results, showed a gain as well.
Overall, the news was good, and the markets reacted to this in early trading, with all of the major indices up.
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The Labor Department reported that initial unemployment claims dropped by 20,000. First time claims for unemployment benefits came in at 512,000 for the week ending October 31. Continuing claims also dropped, falling by 68,000 to 5.75 million.
The consensus estimate for initial claims was 522,000, with estimates ranging from 510,000 to 535,000. Thus, the actual number came in on the optimistic side of analyst estimates.
The news, while good, wasn't all positive. Only two governmental bodies, Indiana and Puerto Rico, showed a drop in claims of more than 1,000. That was countered by the 12 states that showed an increase of more than 1,000 claims, led by California's 14,394.
The drop in initial claims, however, prompted some economists to say that the recovery has taken hold and that the trend for unemployment claims is downward. This indicates that the job market, while still weak, is strengthening.
Those who are not among the 7.2 million people who lost their jobs since the recession began in December of 2007 are doing their jobs more efficiently. The Labor Department's productivity report showed that productivity soared at a 9.5 percent annual rate in the third quarter. This was the biggest gain in productivity since the third quarter of 2003, when it jumped by 9.7 percent.
The gains in productivity didn't come as a result of an increase in production. In fact, production dropped by 3.5 percent. However, that was offset by a decrease in hours worked of 7.5 percent. That drop in hours worked was the biggest seen by the Labor Department since it began keeping records in 1948.
Once again, productivity gains were far better than the consensus estimate of a 6.5 percent increase. Estimates ranged from 3.8 percent to 8.5 percent. Thus, the actual number came in way above even the most optimistic estimate.
The gain in productivity is seen as allowing the Fed to keep interest rates at record low levels, since it means that inflation is unlikely to rear its ugly head. It also means that it's likely that employers will have to resume hiring soon, because they are close to getting as much as they can out of their employees. Further, it's likely that company profits will continue to grow, as they're able to generate the same amount of revenue while spending less.
Finally, retail sales figures from a number of chain stores showed some improvement in the month of October. October is normally a weak time period for retailers, as it falls in between the back to school and critical holiday season. However, cooler than normal weather and some demand on the part of the consumer combined to cause sales to increa
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Teen focused retailers like Abercrombie & Fitch and American Eagle Outfitters posted sales declines. But even there, some retailers, such as the Buckle and Aeropostale were able to increase their sales. Not surprisingly, with consumer spending remaining weak, discounters like BJ's Wholesale Club and Costco posted gains.
Department stores were mixed, with companies like Macy's and J.C. Penney showing declines in sales. But Nordstrom posted a better than expected gain and Kohl's, while reporting worse than expected results, showed a gain as well.
Overall, the news was good, and the markets reacted to this in early trading, with all of the major indices up.
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