U.S. Economic Numbers Continue To Come In Strong

Since the U.S. Federal Reserve decided to reduce its asset purchase program, QE, $10 billion a month from $85 to $75 billion a month, strong economic data continues to roll in. It was this data received before their decision that was strong, and the numbers continue to show improvement. Is the world’s largest economy finally coming out of its rut? Will he Fed reduce QE again in January?

Americans filing claims for unemployment benefits fell last week. It is at its lowest number in almost a month. This points to another strong sign of recovery for the labor market. Initial claims for state unemployment benefits showed a decrease of 42,000 applicants to 338,000. However, last week’s claims were adjusted a 1,000 applicants higher.

We have been seeing new jobless claims moving higher since September. However not enough to suggest we are not see job growth in the labor market. Why? Other indicators, like NFP and the unemployment rate have shown a marked improvement over that same period of time.

Looking at the four week moving average, which is a good indication of week to week volatility, we have seen a 4,250 increase in claims to 348,000. Thanks to these improving numbers, the Fed announce the end of QE earlier this month when the announced a reduction of it asset purchase program beginning in January. Helping their decision was an increase, a solid improvement in payrolls in October and November. The unemployment rate has now hit a five year low at 7 percent.

The recent report also indicated that the number of applicants still receiving benefits, under state programs, after the first week of aid climbed 46,000 to 2.92 million for the week that ended December 14.

In other macro news this week, the U.S. reported better than expected durable goods data. This is indicating a general improvement in the manufacturing sector, helping to boost sentiment of an improving economy.

Orders for manufactured goods moved markedly higher in November. This category also indicates how well businesses are investing and spending and it hit its highest level of increase in almost one year. The U.S. Commerce Department reported that durable goods orders rose 3.5 percent as we saw an increase in demand for goods ranging from big ticket orders like aircraft and machinery to an increase in demand for computers and other electronics.

This continues its solid improvement as last month beat analyst expectations for a two percent increase. We have more than overcome October’s slump of 0.7 percent. Excluding transportation, orders were up 1.2 percent. This is its largest expansion since May of this year.

Overall, we are seeing strong numbers coming out of the U.S. This could mean the state of the economy is better than we previously thought as is its recovery. This could lead the Fed to reduce its QE program again in January, as Ben Bernanke said we could see further reductions if the economy warranted such a move. We will be watching January’s NFP release very closely as that is due out in less than two short weeks.