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This week’s initial jobless claims number was positively impacted by snow in Illinois and the New York/Connecticut area as claims fell 25k to 341k from 366k week-over-week. Keep in mind that while the labor market is undergoing a positive transformation of sorts, the end of the seasonal adjustment tailwind will end at the beginning of March. Nothing dramatic will take effect immediately, but over time, a slow headwind will build that will peak in August as the cycle begins again.

Labor Market: Tailwinds Morphing? - 1

Another important note is that the rate of improvement in the labor market is slowing. The 4-week rolling average of non-seasonally adjusted claims, which we consider a more accurate representation of the underlying labor market trend, was -3.0% lower year-over-year, which is a sequential improvement versus the previous week's year-over-year change of -0.7%. Bigger picture, the labor and housing markets are continuing to improve providing an ongoing tailwind for deep-value, high beta names within the sector.

Labor Market: Tailwinds Morphing? - 2

Labor Market: Tailwinds Morphing? - 3