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.
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.
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%
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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.