Jobs Outlook Continues to Improve

Three reports this past week continue to point to healthy jobs growth in the U.S.

On Tuesday the New York region posted healthy activity with the Empire State general business conditions index rising more than two points to 11.92. New orders showed significant acceleration and new orders accelerated to 25.39.

The report registered accelerating employment numbers during the month.

On Thursday, the Philly Fed reported general manufacturing business conditions of significant month-to-month growth. New orders, the life blood of business, show a doubling in growth. Shipments nearly tripled.

Economic strength was across the board in this report which showed a sharp rise for employment, a build in inventories, and a rise in unfilled orders. Price data confirm the strength showing significant pressure for input prices and emerging power for output prices which jumped to 17.1 following 9.4 in December and minus 3.3 in November. Momentum in the manufacturing sector continues to build.

And finally -- initial jobless claims dropped an unexpectedly sharp 37,000 to 404,000 from a revised 441,000 the prior week. The four-week average likely provides the best insight. The average is down 4,000 to 411,750 and is down more than 14,000 from a month ago.

Bernanke and Fed: Recovery Gaining Traction

The U.S. economy is hitting its stride and gaining traction. That summarized comments by Fed Officials as Chairman Bernanke testified to the Senate Budget Committee on Friday.

"We have seen increased evidence that a self-sustaining recovery in consumer and business spending may be taking hold," said the Chairman.

Other Fed officials quickly echoed his tone.

Fed Board Governor Elizabeth Duke said in a separate speech that the recovery appeared to be revving up. "I am encouraged by signs that the recovery may have gained traction recently," Duke said.

Chicago Fed President Charles Evans -- a big proponent of keeping monetary accommodation in place -- also reported, "More recent data have been coming in somewhat stronger."

Although the recovery still is not as strong as many officials would like, the majority now point evidence of slow to moderate economic improvement in their districts.

In fact just recently several districts have introduced "stress indexes" to quantify the severity of economic shocks along with the associated rebound from such episodes. The measures are based on 11 financial market variables, each
of which captures one or more key features of financial stress.

Current readouts were recently release for the Kansas City and St. Louis Districts. Both show stress indexes that have now returned to historically "normal" levels.

Global Aluminum Demand Rebound is Largest in Nearly 15 Years

Aluminum demand rebounded 14 percent in 2010, the biggest increase since at least 1996, according to data compiled by Bloomberg and reported on Monday. The worlds largest aluminum producer, Alcoa also reported that global consumption will likely continue to increase in 2011 -- probably by at least 12 percent.

Alcoa also reported its highest profit in nine quarters revealing that the price of its product is now approaching pre-recession levels.

Additionally, Chief Financial Officer Chuck McLane said, "Each of our businesses was able to significantly improve their performance." Demand strengthened in most of the Alcoa markets and productivity gained.

And the good news for jobs in the industry? The company said it will restore idled production at three U.S. plants in 2011. More evidence that the 2011 labor market is on the mend.

2011: A Year of Significant Job Growth?

Several of the first credible reports on the health of the job growth in the U.S. point to significant additions ahead in the labor market for 2011.

On Wednesday, the ADP employment report indicated a gigantic 297,000 surge for December private payrolls. This gain is far outside even the most high-end of expectations for most economist's forecasts.

The ADP report came minutes before an additional Challenger Job cut report which showed the best reading in almost 11 years! Fewer layoffs are being announced -- the fewest since June 2000 according to Challenger's count which fell to 32,004 in December vs November's 48,711. The drop confirms last week's report on continued improvement in jobless claims where fewer claimants are filing for unemployment benefits.

The news is no doubt welcome for many and underscores the health of a recovery that is delivering on jobs growth more quickly than any recovery in recent history.

First 2011 Business Headlines Mostly Merry

Facebook, the popular social networking site, has raised $500 million from Goldman Sachs and a Russian investor in a deal that values the company at $50 billion.

China's manufacturing activity eased slightly in December, although it remained in expansion mode, according to a survey of the country's purchasing managers.

In response, Asian stock markets were higher on the first trading day of 2011, with investor confidence boosted by signs that China's efforts at keeping a lid on inflation may be working.

Singapore's economy returned to growth in the fourth-quarter as strength in manufacturing helped offset weakness in the construction sector.

The dollar began the New Year on a stronger note against other major currencies in Asia Monday as investors bought the greenback to position for an expected strong reading in US economic data due later in the day.

Loan refinance rates are declining again with Citibank, Chase and Bank of America all lowering their mortgage rates.

And on Monday, we are likely to see a moderately healthy headline number for the ISM Manufacturing Index for December as the new orders index remains on a recent rebound, posting at 56.6 in November, indicating solid month-to-month growth and a sector that continues to lead a recovery that is now 20 months old.