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NIKKO MARKET COMMENTS
Prepared by
The Nikko Securities Co. International, Inc.
Economic News
Durable Goods orders surged by 2.7% in August after an upward revised 0.1% gain in July. Strong orders for aircraft were instrumental for bulge in orders. Non-aircraft private capital goods orders actually fell by 5.4% unwinding much of last month's 6.6% rise. Among industry groups, orders for electronic equipment leaped by 28.4% in August, recovering from declines in June and July. Orders for primary metals and machinery declined after healthy gains in the past two months. The strong August headline overstates the durable manufacturing sector's health. Nonetheless, business equipment investment is still on course toward double digit growth in the quarter. The weekly unemployment report posted a drop in jobless claims to a 306,000 pace. The four-week moving average has stepped down to 312,000. This report supports other anecdotal evidence of labor market tightness. Advertising to hire workers declined somewhat in August, however. The Conference Board's Help Wanted Ads index fell to a reading of 84 from 87. The panel described demand for workers as still strong. It noted that over the past three months, employment ad volume rose in seven out of nine regions. The weekly indices of mortgage applications showed a surge in refinancing activity. That index rose to 699.6 from 498.5 a week ago. The Home Purchases index rose to 227.3 from 214.3. Lower mortgage rates likely stimulated the refinancing demand. Freddie Mac 30-year fixed mortgage averaged 7.28% this week, down 10-basis points from last week, the lowest rate in 84 weeks.
Robert A. Brusca, Chief Economist
The Nikko Securities Co. International, Inc.
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