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Takeaway: Taking the data at face value, it's less good. However, it's unclear whether California is still causing a meaningful distortion.

This note was originally published October 31, 2013 at 10:06 in Financials

Editor's note: This is an abbreviated excerpt from a Hedgeye Financials Sector report issued earlier this morning by Josh Steiner and Jonathan Casteleyn. For more information on how you can reap the benefits of Hedgeye research click here.


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The labor market appears to have lost a step in the latest week, but conflicting reports over whether California's tech issues are finally out of the data make it hard to state definitively what is happening. The year-over-year rate of improvement in non-seasonally adjusted initial jobless claims slowed to 6.6% from 9.8% in the prior week. The state level California data, which is only available on a 1-week lag, is showing that CA claims were still running above the prior year level by ~15k.

Assuming this 15k was still present in the data in the current week it would significantly alter the conclusion, as the data would instead appear to be resuming its pre-California/Govt shutdown run-rate. We expect greater clarity in the week ahead as we'll be able to see next week whether California's level of claims for this week were distorted.

Nuts & Bolts 

Seasonally adjusted initial jobless claims fell 10k to 340k week-over-week (WoW) and there was no revision to the prior week's data. Meanwhile, the 4-week rolling average of seasonally-adjusted claims rose 8k WoW to 355.25k.

The 4-week rolling average of non-seasonally adjusted (NSA) claims, which we consider a more accurate representation of the underlying labor market trend, was lower by 3.8% year-over-year (YoY), which is a sequential deterioration versus the previous week's YoY change of -5.8%



Joshua Steiner, CFA



Jonathan Casteleyn, CFA, CMT