A trio of reports out Thursday morning provided fresh evidence that the recession is beginning to wind down, halting, at least temporarily, the recent slide in stocks and rise in interest rates.
The Labor Department's weekly employment report estimated an increase in initial jobless claims of 3,000 to 608,000, ahead of Wall Street expectations, but its four week moving average, which is intended to smooth out volatility in the data, was down 7,000 to 615,750.
There was better news in the unadjusted data, which reported actual initial claims under state programs totaled 554,405 in the week ending June 13, a decrease of 26,791 from the previous week. The best news was in the continuing claims numbers for the week ending June 6: A decrease of 148,000 from the previous week to 6,687,000. That was the biggest drop in that statistic since 2001.
Separately, the Conference Board's Index of Leading Economic Indicators rose for the second consecutive month, prompting Ken Goldstein, a Conference Board Economist, to proclaim, "The recession is losing steam."
The LEI Index rose 1.2% in May, following a 1.1% increase in April and a 0.3% decline in March. The board's Coincident Economic Index remained negative though improved, down 0.2% in May on top of a 0.3% drop in April and a 0.7% decline in March. Its Lagging Economic Index, likewise, declined 0.2% in May following a 0.8% decline in April and a 0.6% decrease in March.
"Confidence is rebuilding and financial market volatility is abating," said Goldstein. "Even the housing market appears to be stabilizing. If these trends continue, expect a slow recovery beginning before the end of the year."
He cautioned, however, that "employment will take longer to turn around."
Meantime, the Philadelphia Fed put out its Business Outlook Survey report on regional manufacturing conditions, and it too contained postives. Declines in the region's manufacturing sector were much less in evidence in June. Indices for general activity, new orders, and shipments showed "notable improvement, suggesting recent declines have lessened dramatically," the Philly Fed said. Still, firms reported sustained declines in employment and work hours this month.
Most of the Philly Fed survey's broad indicators of future activity showed improvement, "suggesting that the region's manufacturing executives are becoming more optimistic that a recovery in business will occur over the next six months." The survey's broadest measure of manufacturing conditions, the diffusion index of current activity, increased from -22.6 in May to -2.2 this month, its highest reading since September 2008 when the index was positive for one month. The index has been negative for 18 of the past 19 months, a span that corresponds to the current recession.
The news helped some stocks, notably financials, to gains all morning, with the Dow up a bit less than 1% to 8570, and the S&P up similarly to 918. The NASDAQ, however, was flat to down on the morning.
The builder stocks failed to get caught in the updraft, with the entire group down, most between 2% and 5%, and Beazer continuing the steep selloff touched off by a debt rating downgrade from S&P Tuesday. Beazer shares (NYSE:BZH) had lost another 13% Thursday morning, down to $1.71, a drop of nearly 30% from the share price on Tuesday.