What’s the Story?

by CC May 3, 2012 9:08 am • Commentary


S&P 500 futures expiring in June rose 0.3 percent to 1,401.50 at 8:42 a.m. New York time. Dow Jones Industrial Average futures added 34 points, or 0.3 percent, to 13,238.

Equity futures rose as jobless claims fell to 365,000 in the week ended April 28, a one-month low. The median forecast of 46 economists surveyed by Bloomberg News called for 379,000 applications. Stocks fell yesterday as American companies added fewer jobs than economists projected. A Labor Department report tomorrow may show that employers added 160,000 jobs in April, while unemployment held at 8.2 percent.


First, initial claims took a big dive last week, dropping 27,000 to 365,000. You can all breathe now. It’s not all sun and roses, of course. Last week’s initial claims were revised higher, as they are seemingly every week, to 392,000, a distressing number. The four-week average nudged up by 750 to 383,000, still too high.

Also, announced jobs cuts rose 7.1% in April, according to Challenger, Gray & Christmas, to 40,599 — and up 11.2% from last April — another bit of evidence that the jobs market isn’t doing well.

The research firm noted that a little less than 25% of the cuts came from the education sector, as the public sector deals with its own crippling debt load. Still, Challenger put a hedging spin on it.


Of the eight retailers that had reported April sales by early Thursday, four beat expectations and two missed, according to Thomson Reuters Data.

The Thomson Reuters index of analysts’ expectations for 20 retailers that report monthly sales at stores open at least a year called for a 1.5 percent increase in April, compared with a 4.3 percent rise in March.

March results benefited because of an earlier Easter — April 8 this year, compared with April 24 in 2011. It was also the warmest March in more than 50 years, which helped spur sales of spring clothing.

But that momentum continued into April.


Productivity slipped at a 0.5 percent annual rate, the Labor Department said on Thursday, after rising at an upwardly revised 1.2 percent rate in the last three months of 2011.

The decline in productivity, which measures hourly output per worker, was in line with expectations. Fourth-quarter productivity had been previously reported to have increased at a 0.9 percent rate.

The fall in productivity was the first since the second quarter of 2011 and the biggest decline since the first quarter of that year.

Productivity grew rapidly as the economy emerged from the 2007-09 recession, peaking at an 8.3 percent growth rate in the second quarter of 2009. The gains were driven by companies’ cutting costs, particularly for labor.

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