INITIAL CLAIMS | EGG-CELLENT

Takeaway: Inclusive of the holiday distortion, the separations side of the labor market continues to signal ongoing strength.

Seasonal distortions in high frequency macro data during peri-holiday periods are notoriously prevalent.  Floating holidays, such as Easter, are particularly challenging in terms of normalizing so investors should take an un-convicted view of the single-week seasonally adjusted initial claims data in isolation.   

Indeed, over the past five years, the holiday week data has carried a discretely upward bias with the week-over-week change averaging +20K.  This morning’s data – which was up +14K WoW - is largely congruent with the recent historical tendency.

Holiday related noise aside, the broader conclusion remains unchanged.   With single week claims holding below the 300K level, rolling claims improving to their best level since June of 2000, and the year-over-year change in rolling NSA claims improving to -13% in the latest week, the separations side of the labor market continues to signal ongoing strength.   

And while conspicuous weakness in the energy sector remains  a concern along with emergent weakness in goods employment (strong dollar, declining export demand, lower energy sector investment, and residual port shutdown impacts), strength in the balance of the economy continues to swamp that duo of drags, for now.

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The Data

Prior to revision, initial jobless claims rose 13k to 281k from 268k WoW, as the prior week's number was revised down by -1k to 267k.

The headline (unrevised) number shows claims were higher by 14k WoW. Meanwhile, the 4-week rolling average of seasonally-adjusted claims fell -2.25k WoW to 282.25k.

The 4-week rolling average of NSA claims, another way of evaluating the data, was -13.3% lower YoY, which is a sequential improvement versus the previous week's YoY change of -11.3%

Our basket of energy-heavy state claims fell in the week ending March 28th. However, as oil prices remain low, the spread between that basket and the U.S. as a whole continued to widen to 27.5 from 24.8.

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Joshua Steiner, CFA

Jonathan Casteleyn, CFA, CMT