Initial jobless claims spiked last week, rising to 242,000 from 220,000 for the largest increase since September.
While the government layoffs contributed to the increase, new filings for jobless benefits in Washington accounted for only about 2,000 of the 22,000 overall increase.
The overall increase, which was reported on a seasonal basis, might be subject to some seasonal factors like the Presidents Day holiday.
On a nonseasonal basis, initial claims fell by about 3,000 last week. According to the Bureau of Labor Statistics, the seasonal factors were expected to account for a bigger drop of around 22,500.
It is important not to overreact to only one week of unfavorable data. There were not a lot of reasons to believe the sharp increase in new claims was indicative of labor market weakness, at least for the time being.
Durable goods
The advanced durable goods order data showed mixed results in January with upside surprises coming from the number of orders of core capital goods, yet downside surprises from the number of shipments made on the month.
Orders for capital goods, which is a proxy for private business equipment spending, rose at a robust pace of 0.8% on the month and by 5.1% on a three-month moving annualized basis.
Shipments of the same goods fell by 0.3% on the month and increased by 2.2% on a three-month moving annualized basis. The total number of orders including defense and aircraft rose by 3.1%, driven mostly by aircraft orders from Boeing, which were up by 93.9% on the month.
That was the reason why we don’t see the drop in shipments as being particularly concerning.
Because companies have been pulling forward their orders in anticipation of higher tariffs, shipments and existing inventories have not been able to catch up. Inventory growth for core capital goods has remained low for the past two months.
The future looks less certain, though, as we might get fewer orders because of advance spending, but more shipments as orders are getting filled.
On top of that, it remains unclear how extensive the tariffs will be, which might deter companies from making their investment moves.
