Durable goods jump 3.3 percent, boosted by orders for transportation equipment. Also this week: Procter & Gamble turns to former CEO, extended jobless claims hit post-recession lows, and Ben Bernanke speaks to Congress.
Durable goods on the rise: According to the Commerce Department, orders for durable goods from manufacturers jumped by 3.3 percent ($7.15 billion) in April, far exceeding analysts’ expectations. Most of that increase ($5.09 billion) was in orders for transportation equipment. Also, orders for vehicles increased 1.9 percent. Aircraft orders rebounded as well, by 26 percent. The only dim spot in the report was shipping of durable goods, down by 0.6 percent.
“We are probably in for another month or two of declining shipments during the spring,” Paul Edelstein, director of financial economics at IHSGlobal Insight, wrote via e-mail analysis. “But if orders continue on their current pace, shipments should rebound in the summer. But clearly, the mini-boom in manufacturing over the previous two quarters is over, and the sector is settling into a softer growth trajectory that is more consistent with the overall economy.”
P&G brings back former CEO: If the current chief executive officer isn't working out, why not bring back the former guy? That's the strategy Procter & Gamble Co. is using, announcing Thursday that former CEO A.G. Lafley would take the reins of the maker of Tide, Crest, Pampers, and other household products. He replaces CEO Bob McDonald, who will retire June 30.
Although it has a commanding presence in US households, P&G has struggled to grow sales in emerging markets overseas – a strategy that Mr. Lafley himself initiated before he retired in 2009. The sudden leadership move may have more to do with morale than strategy. Known as a charismatic leader, Lafley told the Associated Press that he would continue the company's strategic course, which has reaped some results recently by cutting costs, introducing new products, and focusing on core developed markets as well as developing ones.
On Friday, the day after the announcement, P&G's stock jumped up 4 percent.
Jobless claims get back on track: Following an unexpected rise two weeks ago, the number of people applying for unemployment benefits dropped by 23,000 to 340,000 claims last week, according to the Labor Department. Continuing claims, meanwhile, fell to 2,912,000 from 3,024,000 from the week before, their lowest level since 2008. “Continuing claims have been steadily improving in recent months and now stand 11.7% below year-ago levels,” Barclays Research economist Cooper Howes wrote in an e-mailed analysis. “This week’s data cover the survey week for the May BLS employment report and, in our view, suggest that the separation side of the labor market has improved since April.”
Bernanke goes to Congress: Federal Reserve chief Ben Bernanke testified before Congress’s Joint Economic Committee Wednesday. In wide-ranging remarks, he warned that withdrawing Fed stimulus too soon could stall economic recovery. The Fed chief pointed to fiscal policies as a drag on growth – “In particular the expiration of the payroll tax cut, the enactment of tax increases, the effects of the budget caps on discretionary spending, the onset of sequestration, and the declines in defense spending for overseas military operations are expected, collectively, to exert a substantial drag on the economy this year,” he said.
You can read Bernanke’s full testimony on the Fed’s website.
Things get worse Abercrombie & Fitch. On the heels of the controversy surrounding the apparel brand’s exclusion of plus-sized customers, Abercrombie & Fitch posted dismal financial numbers for the first quarter, with same-store sales plunging 15 percent. Abercrombie stock fell 10 percent on the news. CEO Mike Jeffries blamed most of the loss on inventory shortages.