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November 6th, 2008

Roundup of This Morning’s Reports

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From The Dismal Scientist: Thursday’s productivity numbers came in better than expected. Nonfarm productivity grew 1.1% (SAAR) in the third quarter, despite the contraction in GDP. Unit labor cost growth was stronger than expected, up 3.6%. Despite the strong growth in unit labor costs, inflation pressures from the labor market are not a concern.

Although the report declined 2.5% from the second quarter, U.S. Productivity has had to maintain its positive efficiency by continuing to cut jobs and employee hours to supplement the lack of demand.

From The Department of Labor: In the week ending Nov. 1, the advance figure for seasonally adjusted initial claims was 481,000, a decrease of 4,000 from the previous week’s revised figure of 485,000. The 4-week moving average was 477,000, unchanged from the previous week’s revised average of 477,000.

Despite the decrease, the report remains over 50% above levels recorded before the economic crisis struck in 2007. Market observers will hold off from declaring any improvement in the job market until they see the four-week moving average consistently decline. Yet, a good report is hard to come by these days, so we’ll take it.

From The Wall Street Journal: October sales reports from U.S. retailers came in largely below weak expectations for a month in which consumer confidence plunged amid the nation’s financial crisis.

But Wal-Mart Stores Inc. topped its modest projections, even as rival discounter Costco Wholesale Corp. missed expectations because of the strengthening dollar.

Despite monthly losses from similar discount retailers, Wal-Mart posted a 2.4% gain in same-store sales, besting their own projections of a 1-2% increase. Target’s monthly loss of 4.8% makes the numbers all the more interesting. Why does Wal-Mart continue to out perform every other discount retailer? Eduardo Castro-Wright, head of Wal-Mart’s U.S. operations, said the key is their consistent low prices on basics throughout their stores. When customers find a low-cost retailer that can supply nearly every consumer need, why go anywhere else? With the implementation of pharmacies, gas stations, and a full selection of grocery items, Wal-Mart has begun to corner every market.

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HSH.com's daily blog focuses on the latest developments in the mortgage and housing markets. Our mission is to relate how changes in mortgage rates and housing policy, as well as the latest financial news, impacts consumers, homebuyers and industry insiders alike. Our 30-plus years of experience in the mortgage industry gives us an edge as we break down the latest changes in an ever-changing market.

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Tim Manni

Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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