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Takeaway: Challenger data showed a surge in July layoffs driven by military restructuring. Meanwhile, Energy appear poised for another round of pain.

Below is the breakdown of this morning's labor data from Joshua Steiner and the Hedgeye Financials team. If you would like to setup a call with Josh or Jonathan or trial their research, please contact 

Army Woes & Energy Waves 

This morning's labor data doubleheader (July Challenger & Weekly Claims) featured weakness stemming from both the Army and the Energy industry. As the chart below shows, large troop reductions caused a ~50-60k surge in announced layoffs in July.

Meanwhile, Energy sector cuts rose to 9k from 0k in June. While we expect the troop count reduction was one-time in nature, our expectations on the energy front are the opposite. In speaking with our Energy Sector Head, Kevin Kaiser, many energy companies are hedged through year-end 2015, implying that later this year/early next year (assuming no bounce in energy) we'll see a second wave of job cuts from Energy.

JOB CUTS & JOBLESS CLAIMS | ARMY WOES & ENERGY WAVES - Challenger

On the claims side, rolling SA claims bounced nominally W/W (+3k to 270k) but remain at/near frictional lows. Recall that a few weeks ago, claims put in a 42-year low. 

The Data

Prior to revision, initial jobless claims rose 3k to 270k from 267k WoW, as the prior week's number was unchanged. Meanwhile, the 4-week rolling average of seasonally-adjusted claims fell -6.5k WoW to 268.25k.

The 4-week rolling average of NSA claims, another way of evaluating the data, was -8.6% lower YoY, which is a sequential improvement versus the previous week's YoY change of -7.8%

JOB CUTS & JOBLESS CLAIMS | ARMY WOES & ENERGY WAVES - Claims2 normal  1

JOB CUTS & JOBLESS CLAIMS | ARMY WOES & ENERGY WAVES - Claims3 normal  1

JOB CUTS & JOBLESS CLAIMS | ARMY WOES & ENERGY WAVES - Claims4 normal  1

JOB CUTS & JOBLESS CLAIMS | ARMY WOES & ENERGY WAVES - Claims5 normal  1

JOB CUTS & JOBLESS CLAIMS | ARMY WOES & ENERGY WAVES - Claims6 normal  1

JOB CUTS & JOBLESS CLAIMS | ARMY WOES & ENERGY WAVES - Claims7 normal  1

JOB CUTS & JOBLESS CLAIMS | ARMY WOES & ENERGY WAVES - Claims9

Joshua Steiner, CFA

Jonathan Casteleyn, CFA, CMT