* Continuing claims dropped 52,000 to 3,392,000 in the week ending February 11, 2012 and built on an 82,000 drop the previous week.
* The four-week moving average of initial claims, which better controls for weekly volatility, fell for the sixth week in a row, dipping to 359,000 from a revised 366,000 (was 365,250) the previous week.
* Part of the improvement in jobs growth in recent months, particularly the solid 52,000 gain in construction employment in January 2012 and December 2011 combined, may reflect the effect of an unusually warm winter resulting in fewer seasonal layoffs. With that said, even accounting for favourable weather, the broad downtrend evident in initial claims since the summer remains an encouraging sign that the jobs market is improving.
US initial unemployment insurance claims held steady at a lower than expected 351,000 in the week ending February 18, 2012 equalling an upwardly revised 351,000 reading (initially reported as 348,000) the previous week. The four-week moving average of initial claims, which better controls for weekly volatility, declined for a sixth consecutive week, falling to 359,000 from 366,000 (was 365,250) the previous week. Continuing claims dropped 52,000 to 3,392,000 in the week ending February 11, 2012 and built on an 82,000 drop the previous week.
The dip in the four-week moving average of initial claims in the latest week, which coincides with the February payroll employment survey week, extends a broad downward trend since hitting a recent peak of 422,000 in September 2011. The downward trend in layoffs in recent months has been reflected in stronger job growth as well with solid 243,000 and 203,000 gains in January and December payroll employment, respectively, that were both well above the previous six-month average of 123,000. Part of the more recent improvements in both the claims and jobs data, particularly the sizeable 52,000 gain in construction jobs in January 2012 and December 2011 combined, may reflect the effect of an unusually warm winter resulting in fewer seasonal layoffs. With that said, even accounting for favourable weather, the broad downtrend in initial claims since the summer remains an encouraging sign that job markets are strengthening.
The market regained the positive support today after a choppy start of the session, where a surge in German Business Confidence to a seven month high bolstered hopes that the euro area can recover from the disastrous debt crisis.
The Munich-based IFO Institute reported the February Business Confidence which generally beat expectations and supported the sentiment. The Business Climate indicator continued the rise for the fourth consecutive month to hit a seven-month high of 109.6 after recording 108.3 in January, marking the highest since July.
German businesses are feeling the eased tension as the debt crisis worries start to gradually ease. Arguably, the debt crisis is not resolved and continues to suppress economic activity in the region and globally yet the outlook has generally improved in the past period and especially with the start of 2012 and as Greece clinched to a new bailout that averts a short term messy default.
We can see the support for businesses clear with eased tension and uncertainty over the outlook, and although the debt crisis remains the clear and evident hurdle for the recovery, investors see now that policy markets from leaders to the ECB standing ready to support the economy.
The improvement was broad based according to the IFO, where the Current Assessment Index also beat expectations and rose to the highest since September at 117.5 from 116.3, while the Expectations gauge rose to 102.3 from 100.9 also marking the highest since July last year.
Upbeat confidence figures come to unwind some of the downside pressure after the February flash PMI services and manufacturing indices from the nation missed expectations and slowed in the second month this year. Strengthening confidence comes in line with the Bundesbank view for the recovery that is gradually gaining momentum.
The Bundesbank printed an upbeat view for the economy in the monthly report earlier this week, saying that the economic outlook 'improved perceptibly' and the bank sees that in the first quarter of 2012 'external factors' will continue to weigh on production, while from the second quarter onwards 'cyclical stimuli could gain the upper hand'. The bank also said that the outlook for the global economy has improved as well.
The EUR/USD extended the gains on the back of the good figures from Germany. The pair is currently trading higher at $1.3315 rising 0.49% from the opening levels of $1.3246 rebounding from the intraday low set so far at $1.3232 and recording a fresh intraday high at the time of the release of $1.3328.
Although the data might be more concern for policy makers and the ECB over a two-speed recovery track in the euro area, especially from leading economies; nevertheless, the big ones are certainly needed now to sustain the track and help in offsetting the downside pressure of the debt crisis. The ECB is still doing its part and offering the second batch of cheap three-year loans next week and that is why we still see the euro-sentiment positive this period.
The IFO also reported improvement in the services confidence as the climate index rallied to 24.9 from 22.3 also the highest since July. The Current Assessment also improved to 32.0 from 31.0 and the Expectations Index surged to 18.0 from 14.0 the highest since June 2011. http://forexcapitalmultiplier.com/
Overall, the data is positive and the market is surely taking advantage of eased uncertainty and strain over the outlook. European stocks managed to rebound from a choppy start on the news as rising confidence offset the pressure of downbeat flow of earnings this morning. http://sevensummitstrader.info/
As of 09:06 GMT, the euro area’s STOXX 50 is trading higher at 2530.35 adding 0.45%, the DAX 30 Index is currently trading in the green rising 0.66% at 6889.10. CAC 40 added 0.45% at 3462.80 and FTSE 100 gained 0.34% to trade at 5936.77. http://tomsea.info/