Employment, Manufacturing, and Leading Indicators Flash Positive Signs

June 18 was yet another good news Thursday. Three independent reports showed positive surprises in employment, manufacturing and leading economic indicators.

Perhaps the biggest news of the day showed that continuing claims for unemployment has now started to fall. It was the first time that continuing claims have fallen since Jan 3. The four week moving average for initial claims also continues to fall further clarifying the lagging peak for those claims for the recession just ended. That lagging peak was in March at 674,000. Thursdays report shows initial claims now at 608,000.

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(Chart Source Haver Analytics)

The good employment news was rivaled by a huge surge in the Philadelphia Fed on regional manufacturing. The Philly reading improved to negative 2.2 from negative 22.6 last month. Economists expected a reading of negative 17. Among the sub-indexes manufacturing shipments actually turned positive for the first time since May of last year. More good news is found in the 6-month outlook where the general business conditions index rose more than 10 points. Respondents also pointed to employment continuing to picking up six months down the road.

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(Source: Econoday)

The Conference Board's index of leading economic indicators (LEI) rose 1.2% in May adding to the 1.1% gain in April. Further the index has now risen 1.2 percent (a 2.4 percent annual rate) between November 2008 and May 2009. That represents the first time the index has increased over a six-month period since July 2007.

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(Source: The Conference Board)

Commenting on Thursday's good news and its effect on stocks, Bill Webb of Gluskin Sheff summarized, "We've already priced in an end of the recession and the start of the recovery."