US: Jobless claims, factory orders and productivity data eyed today – Nomura

According to analysts at Nomura, US new orders received at factories likely increased strongly in March reflecting an outsized increase in aircraft orders according to the March advance durable goods report.

Key Quotes

“The report also indicated declines in core capital goods shipment and orders with downward revisions to previous months’ estimates. This report points to weaker-than-expected momentum in business spending on equipment in Q1. However, this weakness may be transitory as business sentiment remains elevated and new tax policies should remain favorable. That said, new orders of core capital goods were down 0.1% m-o-m in March with downward revisions to February, implying that a pickup in equipment investment could be more gradual in coming months.”

“Initial jobless claims: Although picking up slightly over the past few weeks, initial jobless claims remain very low by historical standards. As firms continue to grapple with a tightening labor market, we expect them to hold on to current employees, which should put downward pressure on initial jobless claims over the medium term.”

“Productivity: Based on the monthly employment reports from the BLS, aggregate hours in the nonfarm business sector likely increased at a pace close to 2% q-o-q saar in Q1 2018. Incorporating our Q1 real GDP growth estimate, Q1 nonfarm productivity growth could be modest for the second consecutive quarter. On a year-onyear basis, productivity growth is likely to remain close to 1%. Unit labor costs in Q4 2017 increased 2.5%, partly driven by a 0.05% decline in productivity growth. We expect productivity to remain subdued in light of structural changes in the economy.”