US initial unemployment claims improved while durable goods orders stumbled.

The initial claims for unemployment in the US dropped to 230,000, but the 4-week average increased. Durable goods orders experienced a decline of 5.2%, with a significant drop of 14.3% specifically in the transportation sector.

Highlights

• The number of initial claims decreases to 230,000, marking a decline of 10,000.
• The 4-week moving average increases to 236,750.
• Orders in July experience a drop of 5.2%, reaching a total of $285.9 billion.
• The transportation equipment sector sees a significant decrease of 14.3%.

Initial Claims: Favorable Shift 

In the week ending August 19, there was a positive development as initial claims for unemployment benefits decreased to 230,000, showing a decline of 10,000 from the previous week. It's worth noting that there was an upward revision of the preceding week's figures, with the number adjusted to 240,000 from 239,000.

4-week Moving Average: Slight Increase

Despite the decline in initial claims, the 4-week moving average witnessed a small uptick, rising to 236,750, an increase of 2,250. The average from the previous week was slightly revised to 234,500, indicating a job market that is somewhat less robust.

Insured Unemployment Rate: Downward Trend

The insured unemployment rate, which provides a comprehensive view of the job market, showed a positive trend. For the week ending August 12, the rate decreased by 0.1 percentage points, settling at 1.1%.

Unemployment Numbers and 4-week Average: Mixed Signals

During the same period, the number of insured unemployed individuals decreased to 1,702,000, reflecting a decline of 9,000. However, there were subtle fluctuations indicated by the 4-week moving average for this metric, which rose to 1,697,250, suggesting some variability in the employment landscape.

Weekly Unemployment Claims Outlook

While the decrease in initial claims and the insured unemployment rate offer encouraging signs, the upward trend in the 4-week moving averages should be observed with caution. Monitoring these indicators closely will be crucial in truly assessing the health of the U.S. job market.

Decrease in Durable Goods Orders in July

According to the U.S. Census Bureau, there was a notable decline in new orders for manufactured durable goods in July, interrupting a four-month upward trend.

Overall Decline

In July, there was a 5.2% decrease in new orders, equivalent to a drop of $15.5 billion, bringing the total to $285.9 billion. This downturn follows a 4.4% increase observed in June.

Impact of Transportation Sector

The decline was driven largely by the transportation equipment sector, which experienced a steep drop of $16.4 billion, accounting for a significant 14.3% decrease and reaching $98.7 billion. This decline came after four consecutive months of gains.

Exclusions Present a Mixed Picture

When excluding transportation from the data, new orders actually showed a modest increase of 0.5%. However, removing defense-related orders from the equation resulted in a 5.4% decline in new orders.

Outlook for Durable Goods

With the decline primarily attributed to the transportation equipment sector, concerns are emerging about the sector's volatility and its potential impact on future manufacturing metrics. Investors and policymakers will closely monitor these figures to assess the current state and direction of the U.S. manufacturing sector.