Implications: A mixed bag of data this morning, with the labor market continuing to improve in March but new orders for durable goods coming in less than expected in February. New claims for unemployment insurance fell 5,000 last week to 382,000, their fifth time below 400,000 in the past seven weeks. The four-week moving average fell to 385,000, the lowest level since July 2008. Continuing claims for regular state benefits fell 2,000 to 3.72 million. New orders for durable goods were disappointing overall, although the weakest categories suggest overall orders will soon turn up. Orders for industrial machinery fell the most of any category but have been even more volatile than usual lately and are still up 12.4% in the past year. The next weakest category was defense aircraft, which is extremely volatile. Meanwhile, shipments of "core" capital goods (which exclude civilian aircraft and defense) rose 0.8% in February after falling last month. This important measure of shipments, which the government uses to calculate GDP, has increased in ten of the last twelve months. Given near record corporate profits, already record-breaking cash on the balance sheet, relatively low borrowing rates in the corporate sector, a recent rise in commercial and industrial lending, plus full expensing for tax purposes for 2011, business investment is likely to bounce substantially in the next several months.
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Posted on Thursday, March 24, 2011 @ 12:29 PM
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