INITIAL CLAIMS: LABOR MARKET MOMENTUM COMING UNDER SOME PRESSURE

Takeaway: The labor market data slowed again in the most recent week, adding to a string of data pointing in the same direction.

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.

 

The Numbers

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%

 

INITIAL CLAIMS: LABOR MARKET MOMENTUM COMING UNDER SOME PRESSURE - 1

 

INITIAL CLAIMS: LABOR MARKET MOMENTUM COMING UNDER SOME PRESSURE - 2

 

INITIAL CLAIMS: LABOR MARKET MOMENTUM COMING UNDER SOME PRESSURE - 3

 

INITIAL CLAIMS: LABOR MARKET MOMENTUM COMING UNDER SOME PRESSURE - 4

 

INITIAL CLAIMS: LABOR MARKET MOMENTUM COMING UNDER SOME PRESSURE - 5

 

INITIAL CLAIMS: LABOR MARKET MOMENTUM COMING UNDER SOME PRESSURE - 6

 

INITIAL CLAIMS: LABOR MARKET MOMENTUM COMING UNDER SOME PRESSURE - 7

 

INITIAL CLAIMS: LABOR MARKET MOMENTUM COMING UNDER SOME PRESSURE - 8

 

INITIAL CLAIMS: LABOR MARKET MOMENTUM COMING UNDER SOME PRESSURE - 9

 

INITIAL CLAIMS: LABOR MARKET MOMENTUM COMING UNDER SOME PRESSURE - 10

 

INITIAL CLAIMS: LABOR MARKET MOMENTUM COMING UNDER SOME PRESSURE - 11

 

INITIAL CLAIMS: LABOR MARKET MOMENTUM COMING UNDER SOME PRESSURE - 12

 

INITIAL CLAIMS: LABOR MARKET MOMENTUM COMING UNDER SOME PRESSURE - 13

 

INITIAL CLAIMS: LABOR MARKET MOMENTUM COMING UNDER SOME PRESSURE - 19

 

INITIAL CLAIMS: LABOR MARKET MOMENTUM COMING UNDER SOME PRESSURE - 14

 

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.

 

INITIAL CLAIMS: LABOR MARKET MOMENTUM COMING UNDER SOME PRESSURE - 15

 

INITIAL CLAIMS: LABOR MARKET MOMENTUM COMING UNDER SOME PRESSURE - 16

 

Joshua Steiner, CFA

Jonathan Casteleyn, CFA, CMT

 



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

Europe's Battles Against Apple, Google, Innovation & Jobs

"“I am very concerned the E.U. maintains a battle against the American giants while doing everything possible to sustain so-called national champions," writes economist Daniel Lacalle. "Attacking innovation doesn’t create jobs.”

read more

An Open Letter to Pandora Management...

"Please stop leaking information to the press," writes Hedgeye Internet & Media analyst Hesham Shaaban. "You are getting in your own way, and blowing up your shareholders in the process."

read more

A 'Toxic Cocktail' Brewing for A Best Idea Short

The first quarter earnings pre-announcement today is not the end of the story for Mednax (MD). Rising labor costs and slowing volume is a toxic cocktail...

read more

Energy Stocks: Time to Buy? Here's What You Need to Know

If you're heavily-invested in Energy stocks it's been a heck of a year. Energy is the worst-performing sector in the S&P 500 year-to-date and value investors are now hunting for bargains in the oil patch. Before you buy, here's what you need to know.

read more

McCullough: ‘My 1-Minute Summary of My Institutional Meetings in NYC Yesterday’

What are even some of the smartest investors in the world missing right now?

read more

Cartoon of the Day: Political Portfolio Positioning

Leave your politics out of your portfolio.

read more

Jim Rickards Answers the Hedgeye 21

Bestselling author Jim Rickards says if he could be any animal he’d be a T-Rex. He also loves bonds and hates equities. Check out all of his answers to the Hedgeye 21.

read more