(RTTNews) - Initial jobless claims surged to 542,000 in the week ending November 15, up from 515,000 in the prior week and marking the highest weekly level since July 1992. The four-week moving average rose to 506,500 from 490,750 - its highest level since January 1983. The abrupt shift higher in the level of new claimants points to another significant deterioration in an already weak labor market. The Department of Labor stated that no special factors were distorting the data during the week. Continuing claims rose to 4.012 million from 3.903 million. They did not break the 4 million mark in either of the past two recessions. The insured unemployment rate ticked up 0.1pp to 3.0 percent.

The Philadelphia Fed survey showed a further weakening in manufacturing activity. The general economic index fell to -39.3 in November from -37.5 in October, below consensus expectations (-35) but slightly above our forecast (-40). The index is now at the lowest level since October 1990. The new orders index, which is a proxy for demand for manufactured goods, fell to -31.4 from -30.5. The employment index fell sharply to -25.2 from -18.0, suggesting further job losses in the manufacturing sector.

Price pressures eased notably in November owing to the retreat in commodity prices. The prices paid index plunged to -30.7 from 5.3, reaching the lowest level in the history of the series. This index has declined 106 index points over the past four months. The prices received index declined by a more modest amount to -15.5 from 5.3.

The index of leading economic indicators declined by 0.8 percent month-over-month in October, more than generally expected (Consensus: -0.6 percent; Barclays: -0.5 percent). A decline in stock prices, supplier delivery times (which indicates slackening demand), and consumer expectations accounted for most of the weak reading. The money supply and the spread between 10-year Treasuries and the funds rate contributed positively to the index. The former reflects a flight to cash-like assets following the recent disruptions in financial markets and is not a positive signal for the outlook, in our view. The coincident index increased by 0.2 percent after falling in each of the previous five months.

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