Is Labor Improving?
The headline number certainly suggests the labor market is roaring ahead, and this is consistent with our view that the seasonality tailwinds will run full force through the end of February. That said, the non-seasonally adjusted data appears to be deteriorating. On a rolling, year-over-year basis, the improvement in the latest week slipped to -4.3% from -7.0% the week prior and -9.7% the week prior to that. We've long argued that looking at the rolling NSA data is a better barometer of the underlying health of the labor market because there are so many errors currently plaguing the seasonally-adjusted data. As such, we think it's a fair question to ask whether the labor market's underlying health is starting to weaken. We'll want to see more data before drawing any firm conclusions.
There was no revision to the prior week's data, so the 5k WoW decrease to 330k from 335k is apples to apples. Meanwhile, the 4-week rolling average of seasonally-adjusted claims fell -8k WoW to 351k.
As mentioned above, the 4-week rolling average of NSA claims, which we consider a more accurate representation of the underlying labor market trend, was -4.3% lower YoY, which is a sequential deterioration versus the previous week's YoY change of -7.0%
Yield Spreads Continue to Widen
The 2-10 spread rose +1 basis point WoW to 159 bps. 1Q13TD, the 2-10 spread is averaging 161 bps, which is higher by 18 bps relative to 4Q12.
Joshua Steiner, CFA