Futures Fade Entire Overnight Rally
9 minutes ago
World View & Market Commentary.
Forest first; Trees second.
Focused on Real & Knowable facts that filter through the "experts" fluff and media hyperbole. Where we've been, what the future may hold and developing a better way forward.
Your family's health care costs: $19,393
NEW YORK (CNNMoney) -- Health care costs for a family of four rose again in 2011, with employees paying a much larger share of the rising expenses, according to a new industry report Wednesday.
American families who are insured through their jobs average health care costs of $19,393 this year, up 7.3%, or $1,319 from last year, according to independent actuarial and health care consulting firm Milliman Inc.
More significantly, employers are making workers shoulder an even bigger share of total health care expenses.
Of the $1,319 annual increase, workers' out-of-pocket costs this year rose 9.2%. That was more than the 6.6% increase the prior year.
Payroll deductions for insurance coverage rose 9.3% this year, also more than the year before.
However, employers' share of workers' health care costs fell 6% in 2010, compared to 8% the year prior.
In what is a big relief for the jobs outlook, initial claims fell back sharply as hoped following a giant special-factor spike in the prior week. Initial claims fell 44,000 in the May 7 week to 434,000 with the prior week revised to 478,000. Despite the decline, the current level is significantly above March with the four-week average continuing to rise, up 4,000 to 436,750 for a very significant 40,000 increase from the month-ago comparison. Claims thankfully came down in the latest week but further declines will be needed in the weeks ahead before confidence in job growth can build.
Producer price inflation at the headline level continues to run hot while the core is more moderate. Nonetheless, the core has been a little warmer in recent months. Overall PPI inflation in April increased 0.8 percent, following a 0.7 percent jump in March. April's figure topped analysts' estimate for a 0.6 percent rise. Energy increased 2.5 percent after a 2.6 percent advance in March. The main culprit was gasoline which rose 3.6 percent in April, following a 5.7 percent surge the month before. However, food also added to the latest PPI jump, rebounding 0.3 percent after a 0.2 percent dip in March. At the core level, PPI growth held steady at 0.3 percent, coming in higher than the median forecast for 0.2 percent. Upward pressure at the core was led by passenger cars and light trucks.
Falling rates are giving a boost to mortgage applications according to the Mortgage Bankers Association whose composite index jumped 8.2 percent in the May 6 week. Mortgage applications rose for both purchases, up 6.7 percent, and refinancing, up 9.0 percent. The purchase index has gained about 1/2 percent over the past four weeks which points to badly needed improvement for home sales. Thirty-year mortgage rates, at 4.67 percent in the latest week, have fallen more than 30 basis points over the past month.
The U.S. trade deficit worsened notably, largely on higher oil prices. But there are some positives in the report as well as negatives. The overall U.S. trade deficit in March expanded to $48.2 billion from a revised $45.4 billion gap in February. The March deficit came in worse than analysts' estimate for a $47.7 billion shortfall. Exports jumped 4.6 percent, following a 1.5 percent decline the previous month. Imports rebounded 4.9 percent after dropping 1.9 percent in February.
The widening of the trade deficit was led by the petroleum gap which grew to $31.3 billion from $25.5 billion in February. The nonpetroleum goods shortfall shrank to $29.8 billion from $32.8 billion the prior month. The services surplus expanded somewhat to $13.9 billion from $13.7 billion in February.
Looking at end use categories for goods, the increase in imports was led by a $7.7 billion jump in industrial supplies with $3.6 billion from oil imports. Auto imports rose $2.1 billion while capital goods ex autos gained $1.6 billion. Foods, feeds & beverages were essentially unchanged. However, consumer goods imports dipped $2.0 billion.
By end-use categories, the boost in improvement in exports was led by a $2.5 billion jump in industrial supplies, followed by automotive exports, rising $1.6 billion. Also increasing were consumer goods, up $0.7 billion, and foods, feeds & beverages, up $0.6 billion.
On a not seasonally adjusted basis, the March figures show surpluses, in billions of dollars, with Hong Kong $2.7 ($2.5 for February), Australia $1.1 ($1.4), Singapore $0.9 ($0.8), and Egypt $0.4 ($0.5). Deficits were recorded, in billions of dollars, with China $18.1 ($18.8), OPEC $10.8 ($9.4), European Union $9.0 ($6.9), Mexico $6.2 ($5.3), Japan $6.1 ($5.2), Germany $4.6 ($3.3), Venezuela $3.0 ($2.1), Canada $2.8 ($3.0), Ireland $2.6 ($2.6), Nigeria $2.5 ($2.5), Korea $0.6 ($0.8), and Taiwan $0.6 ($0.9).
The direction of the trade gap was not a surprise but the impact of higher oil prices was more than expected. However, the good news is that exports are back up and sharply. Export gains were broad based, likely benefiting from a soft dollar and moderately healthy economic growth overseas. Manufacturers should be happy about the export numbers. However, the growing oil gap is a drain on U.S. consumers, businesses, and the economy. And the slippage in imports of consumer goods indicates that businesses may be notching down their forecasts for economic growth the remainder of this year.
The nation's economic recovery is not centered in small business where, in contrast to big business, growth is no better than marginal, according to the National Federation of Independent Business. NFIB's April index of small business optimism slipped for a second straight month, down seven tenths to 91.2 in what the report says reflects the "anemic" pace of economic recovery. The report notes the sample's hiring plans, which are limited, are not consistent with the solid payroll gains of the April employment report. This mismatch, according to the NFIB, suggests that the bulk of new hiring is happening in larger firms.
Import and export price data show inflationary pressures moving into what are still however subdued consumer prices. Import prices for consumer goods rose 0.4 percent in April extending what is an upward monthly trend though the year-on-year rate, at plus 0.6 percent, has just begun to rise into positive ground. Export prices for consumer goods, also up 0.4 percent in the month, have been showing more tangible pressure with the year-on-year rate at plus 3.2 percent.
The rise in prices for consumer goods reflect, to a degree, pass through of high energy prices. Import prices for petroleum rose another 7.2 percent in April for a year-on-year rate of plus 37 percent. High food prices are also a factor, up 0.6 percent on the export side for agricultural products for a year-on-year rate of plus 35 percent.
Headline numbers show a 2.2 percent rise for import prices, a severe increase that pushes the year-on-year rate into the double digits at plus 11.1 percent. Export prices rose a heavy 1.1 percent in the month for a year-on-year rate that is nearly in the double digits at plus 9.6 percent. Today's data will likely raise talk of non-core pressure in this week's producer and consumer price reports.