Editor's Note: This is an abridged excerpt from a research note written earlier this morning by one of our analysts. For more information on how you can subscribe to Hedgeye click here.
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As we foreshadowed last week, the post-auto furlough labor environment proved more even-keeled as claims retraced their prior week bounce and have settled back into their now 16-month trend at sub-330k.
Rate of change in Y/Y improvement is beginning to converge towards zero, a not unexpected dynamic as we approach the lapping of the frictional lower bound in claims. RoC in Y/Y claims slowed to -9.2% from -11% in the prior week and will likely be at or near zero within a few months. This, in and of itself, is not a sign of deterioration in the labor market, just as the worsening rate of change in going from 3 mice to 0 mice to 0 mice in the house is not a sign of things worsening.
That said, it is yet another reminder that we're late cycle.
Once things bottom out from a RoC standpoint it becomes a "how long" until the end proposition.
Prior to revision, initial jobless claims fell 16,000 to 281,000 from 297,000 week-over-week, as the prior week's number was revised down by -1K to 296,000.
The headline (unrevised) number shows claims were lower by 15k WoW. Meanwhile, the 4-week rolling average of seasonally-adjusted claims rose 3.25k WoW to 282.5k.
The 4-week rolling average of NSA claims, another way of evaluating the data, was -9.2% lower YoY, which is a sequential deterioration versus the previous week's YoY change of -11.0%