caseyresearch.com / By Chuck Butler / February 1, 2013 2:50pm GMT
US data push the dollar lower…
Good day. And welcome to February. I can’t believe January is already over, it really flew by didn’t it? The St. Louis University basketball team pulled off what many would call a big upset yesterday by beating #9 Butler last night, and they won in impressive fashion! Congrats to the B-ball Billikens!! We had a busy day on the trading desk yesterday with the markets reacting to what was a plethora of data releases here in the US. And today we will have just as much data released which should lead to another volatile day.
The last day of January started off with data showing the Personal Income and Spending of US consumers increased in December. The surprise number was on the income side where the data showed a 2.6% jump after an adjusted increase of 1% in November. These are some very strong numbers on the income side and were thought mainly to be due to questions regarding the fiscal cliff at year end. It seems many companies paid dividends and employee bonuses earlier than usual in order to avoid the jump in tax rates which everyone knew would be happening as we turned the calendar over. According to a story I read in Bloomberg, the Commerce department estimated about $26.4 billion of the increase in incomes was attributable to early dividend payments and another $15 billion reflected bonuses on other types of irregular pay. So the jump in income wasn’t really increases, it was simply a timing difference so the income numbers during the first quarter will undoubtedly show the flip side of these increases during last quarter.
And in addition to the early bonuses, the payroll tax will be more of a drag on consumer’s disposable income this quarter. And even after the large surge in incomes during the last month of 2012, Personal spending actually showed a smaller increase than expected. Spending was up .2% in December after a .4% increase in the previous month. Other data showed prices remained flat in December as the PCE numbers were flat on a MOM basis.
This data was followed up with the weekly jobs numbers which showed a slight increase in the number of jobless claims last week. The data showed 368k more workers applied for first time employment benefits compared to last weeks 330k. Continuing claims increased to 3197k compared to an adjusted figure of 3175k last week. The pace of recovery in the US labor market certainly isn’t increasing, and we will get even more jobs data later this morning. Economists are expecting today’s Nonfarm Payrolls numbers for January to reflect an increase of 165k with Private payrolls showing a 168k increase and another part of the report to show 10k more manufacturing jobs were added last month. The Unemployment rate is expected to remain at 7.8%, stubbornly high and well above Bernanke’s 6.5% target.