Editor's Note: This research note was originally published April 3, 2014 at 10:20 a.m. by Hedgeye’s Financials team Jonathan Casteleyn & Josh Steiner. Follow Jonathan & Josh on Twitter @HedgeyeJC and @HedgeyeFIG.
Labor Market Tailwinds
Today's initial jobless claims data is positive and marks a continuation of the positive inflection in labor market data seen last week, bringing the new trend to two weeks. As a reminder, we focus on the year-over-year rate of change in the rolling, non-seasonally adjusted data. This week, claims were lower by 8.0% year-over-year, which is better versus the prior week's 7.1% improvement year-over-year.
More importantly, the trend had been deteriorating in the year-to-date period until the inflection two weeks ago. We've now seen positive data for two weeks in a row, which matters because we think it may shed some light on the ongoing debate about what role weather may or may not be playing in the economic data.
As we said last week:
One of the arguments put forward in support of the generally weak 1QTD data has been weather. If weather is playing a role in suppressing the strength of the data then one would expect that as we move from the winter to the spring months we could reasonably expect to see improvement in the data. The next few weeks of data should be important in this regard, as they may serve to answer this fundamental question.
Prior to revision, initial jobless claims rose 15k to 326k from 311k week-over-week, as the prior week's number was revised down by -1k to 310k.
The headline (unrevised) number shows claims were higher by 16k week-over-week. Meanwhile, the 4-week rolling average of seasonally-adjusted claims rose 0.5k week-over-week to 318k.
The 4-week rolling average of NSA claims, which we consider a more accurate representation of the underlying labor market trend, was -8.0% lower year-over-year, which is a sequential improvement versus the previous week's year-over-year change of -7.1%