This morning's weak seasonally adjusted initial jobless claims number should come as no surprise after yesterday's equally abysmal ADP report. Last month, Hedgeye Financials Sector Head Josh Steiner noted that the labor market's seasonal adjustments would shift from a tailwind into a headwind at the beginning of April; we are now beginning to witness the change first hand.
Some would blame the "Easter effect" and spring break for the stagnant job growth and four-month high in jobless claims. While a fair argument, the bigger picture shows that the labor market is not as bad as it would appear to be on the surface of things. Yes, there is a cool down occurring right now but history shows that this happens during April every year. The 4-week rolling average of NSA claims, which we consider a more accurate representation of the underlying labor market trend, was -3.8% lower year-over-year, which is a sequential deterioration versus the previous week's year-over-year change of -5.9%.