The Labor Market Slows Further ...
Last week we profiled the labor market beginning to show modest signs of cooling off. This week's data marks a continuation of that trend. Our preference remains to look at the trend in the year-over-year rate of change in the rolling NSA initial jobless claims. We look for signs of acceleration or deceleration and treat that as a referendum on the marginal strength of the economy. This week, that measure showed 5.0% y/y improvement. Here's how the last five weeks now look, ordered from oldest to most recent: -8.5%, -7.9%, -7.3%, -5.7%, -5.0%. Clearly the trend over the past month has been one of a slowing rate of improvement. This doesn't mean that the economy isn't still progressing and jobs aren't still being added, but it does mean that the rate at which those things are happening is slowing down. Credit-sensitive financials should take note.
Prior to revision, initial jobless claims rose 8k to 339k from 331k WoW, as the prior week's number was revised down by 0k to 331k.
The headline (unrevised) number shows claims were higher by 8k WoW. Meanwhile, the 4-week rolling average of seasonally-adjusted claims rose 3.5k WoW to 336k.
The 4-week rolling average of NSA claims, which we consider a more accurate representation of the underlying labor market trend, was -5.0% lower YoY, which is a sequential deterioration versus the previous week's YoY change of -5.7%
Yield Spreads Recover Modestly
The 2-10 spread rose 6 basis points WoW to 242 bps. 1Q14TD, the 2-10 spread is averaging 243 bps, which is higher by 3 bps relative to 4Q13.
Joshua Steiner, CFA
Jonathan Casteleyn, CFA, CMT