Oil has been in the news recently in case you haven't noticed. It will be important to watch state level initial jobless claims going forward. Why? Energy-heavy states are at risk of higher job loss due to the collapse in crude oil prices.
With that in mind, we're going to start posting occasional updates on how these states are faring from a labor market standpoint.
Our Energy Sector Head, Kevin Kaiser, sent a note out internally a while back flagging an article that showed state level labor market concentrations tethered to energy. The key chart from that note is shown below. The big energy states in the US (in alphabetical order) are Alaska, Louisiana, New Mexico, North Dakota, Oklahoma, Texas, West Virginia and Wyoming. For those interested in the article, it can be found here.
A lot of people don't realize that the Labor Dept publishes initial jobless claims data on a weekly basis, but on a one-week lag. Here's a look at the trend in these energy-heavy states based on the most recent week of data. There's some good news and some potentially bad news. The good news is that if you look at the rate of change in week-over-week NSA initial claims in these energy heavy states, it averages 1.88%. That compares with the national average of 1.90%. This is good. It suggests that, for now, energy states are not diverging from the national trends. The potentially bad news, however, is that if you look at the chart above, you'll notice that some of these energy states are more exposed to Oil & Gas Operations (Alaska, as an example). Alaska actually saw the highest w/w change in claims of the energy states. That said, the other state that saw claims rise faster than the national average was West Virginia, which has a comparatively small oil-based labor market relative to a large coal-mining labor market. It's also worth repeating that one week of data isn't enough to draw any firm conclusions. As we move forward, we'll build out this dataset to see if more concrete conclusions can be drawn, but for now we thought we'd start with an opening salvo at what is one of the big potential black swans for an otherwise strong domestic labor market.
Prior to revision, initial jobless claims fell 5k to 289k from 294k WoW, as the prior week's number was revised up by 1k to 295k.
The headline (unrevised) number shows claims were lower by 6k WoW. Meanwhile, the 4-week rolling average of seasonally-adjusted claims fell -0.75k
WoW to 298.75k.
The 4-week rolling average of NSA claims, another way of evaluating the data, was -12.9% lower YoY, which is a sequential improvement versus the previous week's YoY change of -8.1%
The 2-10 spread fell -7 basis points WoW to 153 bps. 4Q14TD, the 2-10 spread is averaging 178 bps, which is lower by -21 bps relative to 3Q14.
Joshua Steiner, CFA
Jonathan Casteleyn, CFA, CMT