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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.

INITIAL CLAIMS: INCONCLUSIVE - jon7

Processing, Processing ...

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%

INITIAL CLAIMS: INCONCLUSIVE - stein1

INITIAL CLAIMS: INCONCLUSIVE - 2

Joshua Steiner, CFA

203-562-6500

jsteiner@hedgeye.com

Jonathan Casteleyn, CFA, CMT

203-562-6500

jcasteleyn@hedgeye.com