The headline (so far) for the morning is the weekly jobless claims here in the United States.
INITIAL JOBLESS CLAIMS: 378K V 360K ESTIMATED; CONTINUING CLAIMS: 2.865M V 2.840ME
The weekly claims trend continues upward and more importantly the continuing claims number has also continued to grow. It is always continuing claims that is key in that it shows how many of those already on unemployment are finding jobs. With continuing jobless claims still rising is tells us that people who are already on unemployment are not finding work, so as new unemployment claims hit the system it grows the total unemployment levels. There is also a rise in Government employment job cuts. Local news media has been covering stories of cities and towns facing budget problems and having to reduce their payrolls. Government jobs had been one of the largest growth areas in the late 1990’s, but this sector is also facing financial troubles and are forced to cut jobs at many levels, from police officers to maintenance workers. Borders Books (BGP) has suspended their dividend payments and is trying to find a buyer for their business. Borders had found itself in a liquidity problem and has received some cash Pershing Square Capital Management to keep them going while they look for strategic alternatives. Federal Express (FDX) reported a 6% decline in profit margins and said that they are likely to have limited growth next year. They blamed in part, that rising fuel costs have forced customers to find cheaper shipping methods. While that may be true we see things slightly different, we see the loss in shipping revenues as a direct result of business spending cutbacks as companies are having fewer customers and less business in which needs shipping services. Also, the pullback in the consumer spending also has an impact on the shippers. Citigroup (C) has said more layoffs will be coming. Reports are for 2,000 job cuts by next week. Futures have fallen off on the jobless claims and Federal Express earnings. At 10:00 am we will have another economic bit of data as we will see what the Philadelphia Fed index of economic activity looks like. In previous months it had been deteriorating so many will be looking to see how this months data comes in.
