WHOA! Not So Fast with the Happy News
I think there is another way to interpret the “optimistic” data recently discussed in a Reuters article.
Data #1 – Number of Jobless Claims
Fewer U.S. workers signed up for unemployment aid last week, according to the Labor Department. The number of U.S. workers filing initial claims for jobless benefits slipped by 1,000 to 309,000, the department said on Thursday.
Give me a break, a difference of 1,000 may not be statistically significant.
For several weeks now the number of workers seeking an initial week of jobless aid has held steady around 300,000, a level economists say indicates a stable labor market.
Data #2 - Inventories
A separate report from the Commerce Department on Thursday showed inventories at U.S. wholesalers rose 0.3 percent in April as stocks of nondurable goods saw the biggest percentage increase in five months.
After working hard to whittle down bloated inventories, economists said U.S. businesses now appeared to be restocking. A report last week from the Institute for Supply Management showed factory activity picked up last month as a result.
Wait a minute, if you are trying to work off bloated inventories and now inventories are on their way back up, this is not proof of re-stocking. Maybe it indicates that the retailers are not finished working off the inventories.
Data #3 - Retail Sales
U.S. retail chains on Thursday reported moderate May sales increases as warmer weather fueled demand for seasonal items, like gardening and other outdoor goods, helping retailers rebound from a dismal April.
But several specialty apparel chains posted disappointing results, due in part to weak sales of women's clothes and increased competition from department stores trying to lure fashionable shoppers.
Toting up the results, the International Council of Shopping Centers said chain store sales rose 2.5 percent from a year earlier.
Inflation in the last year was 2.5%, so it appears that retail sales are flat.
The inventories-to-sales ratio, a measure of how quickly stocks would be depleted at the current sales pace, fell for the fourth straight month, dropping to 1.12 months from 1.13 months in March.
This is inconsistent with the restocking comments above.
Am I missing something?