INITIAL CLAIMS: WHAT A DIFFERENCE ONE WEEK MAKES

Takeaway: In contrast to last week's soft payroll report, on both an SA and NSA basis, labor conditions improved sharply in the latest week.

Easter Bunny Distortions

The time shifting of Easter has historically been a notable challenge for the seasonality department at the Dept. of Labor. Looking at the latest two weeks of data, we saw claims spike by 28k two weeks ago and then drop by 39k last week (these are both comparisons vs. the unrevised prior number). On the margin, claims were better by 11k over two weeks.

 

Market cheering aside, the trend in SA rolling claims is fulfilling its destiny. A look at the first chart below shows this plainly. SA claims are beginning their steadily rising path that they'll follow through August of this year. In the last three years this has been a major factor contributing to the sector's turn in the Feb-April timeframe. 

 

On an NSA basis the data improved. Last week we lamented that the rate of YoY improvement slowed to almost zero. This week, it jumped to -9.3%, one of the strongest prints we've seen in the last six months. Ostensibly, the two should be averaged, producing a blended YoY improvement of around 4-5%, which happens to be precisely what the rolling NSA YoY trend did (-4.5%).

 

Overall, labor market conditions are holding up well, despite last week's scary headlines. We continue to expec the SA data to deteriorate on the margin over the coming months, but the true, underlying trend is strong.

 

The Numbers

Prior to revision, initial jobless claims fell 39k to 346k from 385k WoW, as the prior week's number was revised up by 3k to 388k. The headline (unrevised) number shows claims were lower by 42k WoW. Meanwhile, the 4-week rolling average of seasonally-adjusted claims rose 3k WoW to 358k. The 4-week rolling average of NSA claims, which we consider a more accurate representation of the underlying labor market trend, was -4.5% lower YoY, which is a sequential improvement versus the previous week's YoY change of -3.5%

 

INITIAL CLAIMS: WHAT A DIFFERENCE ONE WEEK MAKES - 1

 

INITIAL CLAIMS: WHAT A DIFFERENCE ONE WEEK MAKES - 2

 

INITIAL CLAIMS: WHAT A DIFFERENCE ONE WEEK MAKES - 3

 

INITIAL CLAIMS: WHAT A DIFFERENCE ONE WEEK MAKES - 4

 

INITIAL CLAIMS: WHAT A DIFFERENCE ONE WEEK MAKES - 5

 

INITIAL CLAIMS: WHAT A DIFFERENCE ONE WEEK MAKES - 6

 

INITIAL CLAIMS: WHAT A DIFFERENCE ONE WEEK MAKES - 7

 

INITIAL CLAIMS: WHAT A DIFFERENCE ONE WEEK MAKES - 8

 

INITIAL CLAIMS: WHAT A DIFFERENCE ONE WEEK MAKES - 9

 

INITIAL CLAIMS: WHAT A DIFFERENCE ONE WEEK MAKES - 10

 

INITIAL CLAIMS: WHAT A DIFFERENCE ONE WEEK MAKES - 11

 

INITIAL CLAIMS: WHAT A DIFFERENCE ONE WEEK MAKES - 12

 

INITIAL CLAIMS: WHAT A DIFFERENCE ONE WEEK MAKES - 13

 

INITIAL CLAIMS: WHAT A DIFFERENCE ONE WEEK MAKES - 14

 

Yield Spreads

The 2-10 spread fell -2.0 basis points WoW to 158 bps. 2Q13TD, the 2-10 spread is averaging 156 bps, which is lower by -12 bps relative to 1Q13.

 

INITIAL CLAIMS: WHAT A DIFFERENCE ONE WEEK MAKES - 15

 

INITIAL CLAIMS: WHAT A DIFFERENCE ONE WEEK MAKES - 16

 

 

Joshua Steiner, CFA


SECTOR SPOTLIGHT | Live Q&A with Healthcare Analyst Tom Tobin Today at 2:30PM ET

Join us for this edition of Sector Spotlight with Healthcare analyst Tom Tobin and Healthcare Policy analyst Emily Evans.

read more

Ouchy!! Wall Street Consensus Hit By Epic Short Squeeze

In the latest example of what not to do with your portfolio, we have Wall Street consensus positioning...

read more

Cartoon of the Day: Bulls Leading the People

Investors rejoiced as centrist Emmanuel Macron edged out far-right Marine Le Pen in France's election day voting. European equities were up as much as 4.7% on the news.

read more

McCullough: ‘This Crazy Stat Drives Stock Market Bears Nuts’

If you’re short the stock market today, and your boss asks why is the Nasdaq at an all-time high, here’s the only honest answer: So far, Nasdaq company earnings are up 46% year-over-year.

read more

Who's Right? The Stock Market or the Bond Market?

"As I see it, bonds look like they have further to fall, while stocks look tenuous at these levels," writes Peter Atwater, founder of Financial Insyghts.

read more

Poll of the Day: If You Could Have Lunch with One Fed Chair...

What do you think? Cast your vote. Let us know.

read more

Are Millennials Actually Lazy, Narcissists? An Interview with Neil Howe (Part 2)

An interview with Neil Howe on why Boomers and Xers get it all wrong.

read more

6 Charts: The French Election, Nasdaq All-Time Highs & An Earnings Scorecard

We've been telling investors for some time that global growth is picking up, get long stocks.

read more

Another French Revolution?

"Don't be complacent," writes Hedgeye Managing Director Neil Howe. "Tectonic shifts are underway in France. Is there the prospect of the new Sixth Republic? C'est vraiment possible."

read more

Cartoon of the Day: The Trend is Your Friend

"All of the key trending macro data suggests the U.S. economy is accelerating," Hedgeye CEO Keith McCullough says.

read more

A Sneak Peek At Hedgeye's 2017 GDP Estimates

Here's an inside look at our GDP estimates versus Wall Street consensus.

read more

Cartoon of the Day: Green Thumb

So far, 64 of 498 companies in the S&P 500 have reported aggregate sales and earnings growth of 6.1% and 16.8% respectively.

read more