Economic Data Deluge
This morning, we see really terrific numbers on Q4 Productivity — the key to a strong economy outside employment levels, etc. It’s a first read, so subject to revisions in the future, but for now we’ll take it: +3.0% is half a percentage point higher than expected, and more than double the upwardly revised +1.4% the previous quarter. This is the best print in exactly a year.
To add to this good news, Q4 Unit Labor Costs came down 40 bps from expectations: +1.1%, nearly half of the previous quarter’s downwardly revised +2.0%, and the smallest month-over-month result since Q1 2021. We haven’t thrown around the term “Goldilocks” too much lately, but this morning, the shoe fits (to mix up fairy tale metaphors — you’re welcome).
Initial Jobless Claims also came down last week: 183K was 8K lower than expectations, and even lower than the downwardly revised 186K the previous week. We haven’t seen new jobless claims this low since April of last year — fairly remarkable considering the amount of layoffs we’ve seen, at least in the Tech sector, over the past month or two.
Continuing Claims sank, as well, to 1.655 million two weeks ago (Continuing Claims are reported a week in arrears from new claims) from a downwardly revised 1.67 million the previous week. Basically, anything below 2 million longer-term jobless claims can be considered a win for the labor market. And we are currently at historically low levels on long-term jobless claims, even with the aforesaid layoffs.
Of course, tomorrow’s nonfarm payroll report from the U.S. Bureau of Labor Statistics (BLS) will be the major guide for how American employment is holding up in our current economic climate. Expectations are for fewer than 200K new jobs created last month — and investors of late have kept one eye open for a downward surprise that has yet to manifest itself, again in light of recent layoffs announced.
Elsewhere, we saw earnings beats this morning from Big Pharma players Merck MRK, Bristol Myers-Squibb BMY and Eli Lilly LLY with only Lilly coming up short on the top-line. These figures follow Pfizer’s PFE big quarter earlier this week, and they pre-date the big afternoon coming up this earnings season: Apple AAPL, Amazon AMZN and Alphabet GOOGL all report results after today’s closing bell.
Pre-market futures were flat directly following this morning’s news items, but are now up across the board: the Dow has swung into the green during the writing of this column, +38 points, whixh is matched exactly by the S&P 500. The tech-heavy Nasdaq, already the big outperformer year-to-date, is +250 points at this hour.
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