Third Quarter GDP Revised Up to 2.7%, Weekly Jobless Claims Fall

Arthi Gupta
29 Nov, 2012
New York City

Investors focused on the economic reports and shifted away from the fiscal cliff noise. Third quarter GDP growth was revised higher to 2.7% and weekly unemployment claims declined for the second week in a row last week.

[R]12:05 PM New York – Investors focused on the economic reports and shifted away from the fiscal cliff noise. Third quarter GDP growth was revised higher to 2.7% and weekly unemployment claims declined for the second week in a row last week.[/R]

Stocks in early trading on Wall Street gained after the release of stronger than previously estimated economic growth and number of Americans filing for unemployment claims declined for the second week in a row.

GDP Growth Revised to 2.7%

Gross domestic product expanded at 2.7% annual rate in the third quarter to September compared to the previous estimate of 2% last month. The faster growth was driven by higher inventory investment.

Consumer spending was revised lower to 1.5% increase from the previous estimate of 2% growth and business spending was revised to a decline of 2.2% from the 1.3% fall in the previous estimate.

Excluding inventories, economic growth was revised to 1.9% from the previous estimate of 2.1%. Trade contributed to 0.14 percentage point increase to GDP growth compared to previous estimate of 0.18% shrinkage in the previous estimate.

Housing construction was trimmed to a 14.2% annual rate of increase from the previous estimate of 14.4% and spending on non-residential structures declined after five quarters of increase.

Weekly Jobless Claims Decline

Weekly jobless claims decreased 23,000 to 393,000 in the week ending on November 24, according to the Labor Department.

Job market may be stabilizing after the claims declined in the mid-Atlantic region for the second week. The region employs about 14% of all U.S. workers and employers may be returning to normal pace the after the superstorm Sandy.

However, total jobs claims are expected to be distorted for a few more weeks till most business catch up and rebuild operations in the region.

Euro zone economic confidence improved in November, survey results from the European Commission showed. The corresponding index rose to 85.7 in November from 84.3 in October.

In Japan, Shinzo Abe, the opposition leader made several forceful calls for the central bank to make more accommodation to weaken the yen and stimulate the economy.

Separately, Japanese retail sales fell 1.2% annually in October, following a 0.4% gain in September, according to a report released by Ministry of Economy, Trade and Industry.

Earnings Review

Cracker Barrel Old Country Store, Inc. ((CBRL), the combined restaurant and gift stores operator reported first quarter total revenue of $627.5 million, representing an increase of 4.8% over the first quarter of the prior year. Comparable store restaurant sales increased 3.3%, including a 2.5% increase in average check.

Net income in the quarter fell to $23.19 million or 97 cents per diluted share compared with $23.8 million or $1.03 per share last year.

Kingfisher plc, the home improvement retailer reported third quarter total group sales fell 3.9% to £2.7 billion. Retail profit in the quarter declined 5.9% to £257 million.

Tiffany & Co. ((TIF)), the jeweler reported third quarter net sales increased to $852.74 million from $821.77 million last year. Net income in the quarter decreased 30% to $63.18 million or 49 cents per diluted share from $89.69 million or 70 cents per share the prior year.

Royal Bank of Canada, the financial services provider reported fourth quarter total revenue rose to C$7.52 billion compared to C$6.69 billion in the prior year. Net income in the quarter increased 22% to C$1.91 billion from C$1.57 billion last year. Profit per share was C$1.25 compared to C$1.02 last year.

Full year revenues increased to C$29.77 billion from C$27.64 billion prior year. Net income for the year increased to C$7.54 billion from C$6.44 billion last year. Profit per share was C$4.93 compared to C$4.19 prior year.