Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Johnny Canuck who wrote (39767)	6/19/2003 8:04:13 PM
From: Johnny Canuck	Read Replies (1) \| Respond to of 71624

Economy Mending? Jobless Down, Gauges Up Thursday June 19, 4:22 pm ET By Doug Palmer WASHINGTON (Reuters) - Economic gloom lifted slightly on Thursday with reports showing a fall in U.S. jobless claims, signs of a pickup in mid-Atlantic factories and a strong gain in a broad economic forecasting gauge. ADVERTISEMENT The Labor Department said first-time claims for unemployment insurance fell for the second week in a row last week, while the Philadelphia Federal Reserve Bank said its June factory index rose after three months of declines. The private Conference Board said its leading indicators index in May logged its largest rise since December 2001, while a separate Commerce Department report said the U.S. current account deficit widened nearly 6 percent in the first quarter to a record $136.1 billion. "If the economy is stuck in a soft patch, the job market is stuck in the mud," said economist Oscar Gonzalez at John Hancock Financial Services. "The only good news is that the market is not getting dramatically worse. Still, if you're out of work, you're out of luck." The Philadelphia Fed said factories in the mid-Atlantic region boosted production, feeding hopes a revival may be brewing for the moribund manufacturing sector. The bank said its factory business conditions index rose to 4.0 in June from -4.8 in May, the first month of growth since February and a tad above forecasts of analysts surveyed by Reuters who, on average, had expected a reading of 3.3. However, the 3.3 forecast was not the one that prevailed in the markets when the report was issued -- many economists had raised their estimates sharply -- after a jump in the New York Fed's Empire State manufacturing survey earlier in the week. The dollar lost ground after the Philadelphia Fed report was released but later steadied. Treasury bonds were mostly higher as investors realized the manufacturing index had not met so-called "whisper" numbers -- which predicted a reading as high as 25 -- and stocks fell about 1.5 percent. Wall Street was chiefly focused on what the Federal Reserve would do at next week's policy meeting, and the reports had little impact on expectations it would deliver an interest-rate cut -- perhaps as big as a half percentage point. The Fed has expressed concern about the potential for deflation, with lower prices widespread due to the weak economy. WHAT HAPPENED TO THE POST-WAR BOOM? Taken together, Thursday's reports fostered hopes that the long-awaited post-war economic pick-up may be a bit nearer, but most economists were reluctant to celebrate yet. "Two of these indexes (Empire State survey and Philly Fed) does not make a full recovery. But it certainly is, along with other data we have seen recently, pointing in the right direction," said Tim O'Neill, chief economist at BMO Financial Group in Toronto. The Labor Department said first-time claims for state jobless benefits, a rough guide to the pace of U.S. layoffs, dropped by 13,000 to 421,000 in the June 14 week from a revised 434,000 the prior week. The claims number was lower than economists had expected, but some cited the worrying fact that claims have been stuck above 400,000 -- a level regarded as signaling labor market erosion -- for 18 weeks. "While this is an encouraging development, the latest reading is still high by historical standards, and the pace of unemployment insurance applications will need to decline further in order to signal a stabilization in labor market conditions," Jade Zelnik, economist at RBS Greenwich Capital, said in a report. In more upbeat news, the Conference Board said its index of leading indicators rose 1.0 percent in May, well ahead of the expectations of Wall Street economists, who had forecast a 0.6 percent rise. "The leading economic index finally points to a recovery almost a year and a half after the end of the recession," the board's chief economist, Ken Goldstein, said in a statement. "But dangers present in the first five months of the year have not disappeared completely. Chief among them is a lack of business confidence." CURRENT ACCOUNT DEFICIT ANOTHER RECORD Economists polled by Reuters had expected the current account gap, the broadest measure of trade since it includes investment flows as well as goods and services, to come in at $141.2 billion. However, some analysts called the lower number was small consolation. "The current account deficit was smaller than expected but it's still a record," said Anne Parker-Mills, senior economist at Brown Brothers Harriman in New York. The growing deficit has weighed on the dollar in recent months. Many analysts believe the huge gap is unsustainable over the long run and raises the risk of a sharp correction and an even weaker dollar.