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Takeaway: This morning's print shows considerable week-over-week softening.

Labor Data Hits a Speed Bump

As we pointed out last week, Easter week is notoriously choppy from a data standpoint so investors should take the data with a grain of salt. Based on this distortion, we've seen significant volatility in the data in the last couple weeks. For instance, on a year-over-year NSA basis, this week claims were up 5.1% as compared with down 8.3% in the prior week. The 4-week rolling average, the better measure, showed a decelerating rate of improvement, moving to -8.2% from -10.9% on a year-over-year basis.  

Jobless Claims: Less Good - 3 

We're not overly concerned by the sudden deterioration in this week's print as the ADP number for April was reasonably strong and the Challenger report, while up slightly month-over-month, was in-line with recent trends. That said, should we see a continuation of this week's print in next week's data that would be more disconcerting.

For now, it appears the labor market recovery remains on track, albeit at a moderately decelerating rate of improvement.

The Data

Prior to revision, initial jobless claims rose 15k to 344k from 329k week-over-week, as the prior week's number was revised up by 1k to 330k.

The headline (unrevised) number shows claims were higher by 14k week-over-week. Meanwhile, the 4-week rolling average of seasonally-adjusted claims rose 3k week-over-week to 320k.

The 4-week rolling average of NSA claims, which we consider a more accurate representation of the underlying labor market trend, was -8.2% lower year-over-year, which is a sequential deterioration versus the previous week's year-over-year change of -10.9%

Jobless Claims: Less Good - 2

Jobless Claims: Less Good - 5

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Editor's Note: This is an excerpt of a research note that was originally provided to subscribers on May 1, 2014 at 10:27 a.m. by Hedgeye’s Financials team Jonathan Casteleyn & Josh Steiner. Follow Jonathan and Josh on Twitter @HedgeyeJC and @HedgeyeFIG.

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