Tepid growth (in the U.S.) is still better than no growth (in the EuroZone) in today’s economic reports

It was a tale of two economies today.

Data showed the U.S. economy growing tepidly.

Which was still a quite a bit better than data from Europe that showed the EuroZone headed toward recession.

In the United States initial claims for unemployment dropped to 351,000 for the week ended February 25—but the numbers showed a drop only because the prior week’s initial claims figures were revised upward to 353,000 from 351,000. (Economists had projected initial claims of 355,000 for the week.) Personal spending climbed just 0.2% in January, well below the 0.4% forecast by economists surveyed by Briefing.com. Income grew by 0.3%, less than the 0.4% projected by economists. And the Institute for Supply Management manufacturing index dropped to 52.4 in February from 54.1. The index stayed above the 50 level that separates growth from contraction but a move down to 52.4 is a move in the wrong direction.

But the U.S. news was a stroll on the beach compared to the news from the EuroZone. Inflation in the European Union climbed to 2.7% in February from 2.6% in January. Unemployment in the EuroZone hit 10.7% in January, the highest since the start of the euro in 1999. The EuroZone purchasing managers index did edge higher to 49.0 in February from 48.8 in January but a reading below 50 still pointed to a contracting economy. The German purchasing managers index for manufacturing remained above 50 at 50.2 in February but that marked a move lower (from 51.0) for the EuroZone’s strongest economy.  The French purchasing managers index came in at 50, down from 50.2 in January and in Italy it remained below 50 at 47.8.

European stocks rose on the day on news of progress in finalizing the new Greek rescue package and on well-subscribed Spanish bond auctions. But the economies of the EuroZone continue to show signs of slowing. At some point that economic fact becomes a problem for countries relying on austerity to meet their budget deficit targets.

That “problem” has already shown up in the European summit that began today with Spain asking for flexibility on meeting its budget deficit targets for 2011 and 2012.

Investors are looking at a full schedule of news on the U.S. economy this week. Which is especially important to this stock market because, more than anything else, it’s anticipation of solid U.S. economic growth that supports stock prices at current levels.

On Tuesday we get data on durables orders for January. In December durables orders climbed 3.0% (economists had expected a 2% increase) on top of a 4.3% (after an upward revision) gain in November.

This time around economists are expecting a 1.4% drop in durables orders.

That headline won’t be terrible news if most of the drop came from the very volatile aircraft sector, where the timing of a big order can easily send overall orders from plus to minus and back again. Watch the numbers of orders for capital equipment. This is the stuff that companies order to make more stuff and the rise or fall of this number is an important indicator of business confidence in the economy. If CEOs think the economy is likely to grow, they’ll put in orders for more production machinery. A drop in this number would be a sign that no matter what U.S. consumers say about the domestic economy, CEOs see the global economy slowing.

Wednesday brings the second revision of fourth quarter GDP numbers. Read more

In the January jobs number it’s the upside surprise that counts

Not just a good U.S. jobs number for January this morning but a surprisingly good jobs number. The U.S. economy added 243,000 jobs in January, up from a gain of 220,000 jobs in December. The private sector added 257,000 jobs in the month. Over the last three months the U.S. private sector has added 655,000 jobs.

Economists analyzing December’s data had pointed out that about 40,000 temporary workers hired by UPS and FedEx in December to delivery holiday packages would probably be let go in January. That would put a big drag on the January jobs number, economists reasonably concluded. Going into today’s release from the Bureau of Labor Statistics, economists surveyed by Briefing.com were expecting nonfarm payrolls to climb by 168,000.

The January jump in jobs looks to be connected to a recent drop in layoffs. Read more

A promising set up today in the weekly initial claims for unemployment data for tomorrow’s release of the December jobs number.

For the week that ended December 31 the number of people filing new claims for unemployment dropped to 372,000. That was a significant decline from the 387,000 initial claims filed in the week ended December 24. Economists surveyed by Briefing.com had expected the initial claim number to drop to 375,000.

Even the continuing claims for unemployment number dropped to a still –horrendous 3.595 million for the week from 3.617 million the week before.

Today’s improved initial claims numbers argue that there’s a good chance that the non-farms payroll number to be released tomorrow will show something better than the 150,000 increase expected by economists, according to Briefing.com.

In November payrolls grew by a net 120,000 jobs. That was up from a revised 100,000 gain in October. A 150,000 gain in jobs for December would create a three-month upward trend.

That in itself would be greeted with cheers by a stock market that sees growth in the U.S. economy as the only growth story in town at the moment. Read more

Good news this morning on unemployment–with the usual seasoning of worry

(Guarded) optimism reigns this morning after initial claims for unemployment came in below forecast and consumer confidence climbed.

The “guarded” nature of today’s optimism, however, results from yet another cut to U.S. third quarter GDP growth on the third revision to the statistics and a sneaking suspicion among economists that the good news on the economy is only temporary.

As of 1:30 New York time the Dow Industrial Average was up 0.6% and the Standard & Poor’s 500 Stock Index was up 0.8%. In Europe the German DAX Index closed up 1.1%, the French CAC 40 was up 1.4%, and the Spanish IBEX 35 was up 1%.

New claims for unemployment in the United States fell by 4,000 to 364,000 for the week ended on December 17, the Department of Labor announced. That’s the lowest level for initial claims since April 2008. Economists surveyed by Bloomberg had projected an increase in initial claims to 380,000 for the week.

The revised Michigan Consumer Sentiment Index climbed to 69.9 in December from an initial reading of 67.7. Economists had expected a revision to 68.0.

It’s only logical that a drop in new claims for unemployment would go together with improved consumer confidence—if fewer people are losing their jobs, consumers feel better about spending. Lending a helping hand are the cheapest gasoline prices since February. That puts more money in consumers’ wallets and takes some strain off of family budgets.

But we very seldom get good news these days without a caveat—and today is no exception. Read more