May 26 2012 Jobless Claims Down, First Quarter GDP Lowered, ADP Shows 133,000 Private Jobs Added, Chicago April 2012 PMI At Sept. 2009 Levels:
Negative economic data brings more easing into question, calls for additional global liquidity.
The Labor Department said today jobless claims increased from a revised 373,000 in the prior week. First-time claims for jobless unemployment benefits rose by 10,000 to 383,000 for the week ended May 26. The median estimate from a Bloomberg survey was 370,000. This is more evidence tomorrow’s jobs number will confirm a whole quarter of sluggishness in 2012.
GDP Down from 2.2 Percent to 1.9 Percent
The U.S. economy grew at a slower pace than previously expected. U.S. gross domestic product was revised down from 2.2 percent to an annual rate of 1.9 percent in the first quarter of 2012 according to the Commerce Department.
ADP Shows Jobs Growth Dismal
ADP released more economic bad news today when their report showed an additional 133,000 new private sector jobs were added. This level of growth is not enough to jumpstart the economy and the data from ADP caused economists to lower their estimates for May 2012 growth numbers from the government that will be released tomorrow. Some estimates for monthly unemployment growth are now below 100,000.
We believe monthly unemployment data will be roughly 120,00 +- 50,000 similar to April and March which will be 3 low growth months in a row.
Chicago ISM Declines To 2009 Low
The Institute for Supply Management-Chicago released further bad news on top of the other negative data that came out today. The ISM index fell from 56.2 to 52.7 in April 2012. This is the lowest PMI reading since September 2009.
All of the reasons above helped us forecast less economic growth and we decreased our outlook from mixed positive to mixed accordingly. We believe more global liquidity is coming and this economic news comes at a particularly bad time when operation twist is coming to an end. We are expecting to hear more news about global liquidity and expect central banks to ease or implement monetary policy.