Economic data lifts small caps
The Russell 2000 (NYSE: IWM) and the other major U.S. indices are posting solid gains following news of upbeat economic data.
At 10:48 a.m. ET, the small-cap index was up 10.69 points, or 1.42%, to 762.75. The Dow Jones Industrial Average (INDU) had gained 145.91 points, or 1.10%, to 13,394.64.
Non-farm U.S. productivity increased a healthy annualized rate of 6.3% during the third quarter, according to revised numbers released by the Labor Department before the start of trading.
That’s the largest productivity gain in four years and above the initially reported increase of 4.9%. Productivity rose 2.2% during the second quarter.
Unit labor costs, the cost of worker compensation and benefits per unit of manufactured output, fell 2%, reflecting the upward revision to productivity and the downward revision to hourly compensation.
Unit labor costs are a key measure of inflation.
If a rise in labor costs is not matched by a rise in productivity, which would allow the company to produce more and cover the extra labor costs with proceeds from the increased output, costs are either absorbed by the company or passed along to the consumer in the form of higher prices.
Constantly increasing productivity is hence crucial if the economy is to grow without a jump in inflation.
In other economic news, the U.S. Commerce Department announced that factory orders rose 0.5% in October after an upwardly revised climb of 0.3% in September. The October rise outpaces economists’ projections.
Elsewhere, business solutions provider Automatic Data Processing, Inc. (NYSE: ADP) reported that U.S. private-sector jobs increased 189,000 in November, well above the 60,000 forecast by economists.
Here are the current biggest percentage gainers and losers among companies with a market cap between $100 million and $750 million:
Biggest percentage gainers:
• China Shenghuo Pharmaceutical Holdings, Inc. (KUN), up 25%.
• Angelica Corp. (AGL), up 14% on news of a rise in third-quarter net income.
• Flow International Corp. (FLOW), up 12% on news it will acquire OMAX Corp. through an options agreement for $109 million in cash and stock.
Biggest percentage losers:
• Agria Corp. (GRO), down 10%.
• Research Frontiers Inc. (REFR) down 8%.
• D&E Communications, Inc. (DECC), down 9%.
