INITIAL JOBLESS CLAIMS | BACKING UP OFF OF HISTORICAL LOWS

Takeaway: Both rolling and spot SA claims are now on the way upwards after each hitting 42-year lows.

Both rolling and spot SA claims are now on the way upwards after each hitting 42-year lows. Spot claims hit their low of 255k five weeks ago. Since then, the reading has risen to 277k. Rolling claims hit their low of 266k two weeks ago and rose to 272k last week. The recent 42-year lows exemplify extreme strength in the labor market. However, the subsequent upward movement in claims exemplifies the point we continue to highlight; the economy faces a high degree of resistance against continued improvement from here.

 

In energy-heavy states, the labor market worsened in the week ending August 8 versus the U.S. as a whole. The chart below shows that as oil prices continued to fall, the spread between indexed claims in energy states versus the US increased from 9 to 11 week over week.

 

INITIAL JOBLESS CLAIMS | BACKING UP OFF OF HISTORICAL LOWS - Claims18

 

Additionally, to emphasize the weakness in the oil industry, we provide the following chart, courtesy of Ben Ryan from our Macro Team. Year-over-year growth in overall oil industry employment has been accelerating downward since December 2014 and entered contraction territory this March. Furthermore, we expect this reading to fall further. As we shared a few weeks ago, our Energy Sector Head, Kevin Kaiser, pointed out that 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.

 

INITIAL JOBLESS CLAIMS | BACKING UP OFF OF HISTORICAL LOWS - Claims20

 

The Data

Prior to revision, initial jobless claims rose 3k to 277k from 274k WoW, as the prior week's number was revised down by -1k to 273k.

 

The headline (unrevised) number shows claims were higher by 4k WoW. Meanwhile, the 4-week rolling average of seasonally-adjusted claims rose 5.5k WoW to 271.5k.

 

The 4-week rolling average of NSA claims, another way of evaluating the data, was -9.9% lower YoY, which is consistent with the previous week's YoY change.

 

INITIAL JOBLESS CLAIMS | BACKING UP OFF OF HISTORICAL LOWS - Claims2

 

INITIAL JOBLESS CLAIMS | BACKING UP OFF OF HISTORICAL LOWS - Claims3

 

INITIAL JOBLESS CLAIMS | BACKING UP OFF OF HISTORICAL LOWS - Claims4

 

INITIAL JOBLESS CLAIMS | BACKING UP OFF OF HISTORICAL LOWS - Claims5

 

INITIAL JOBLESS CLAIMS | BACKING UP OFF OF HISTORICAL LOWS - Claims6

 

INITIAL JOBLESS CLAIMS | BACKING UP OFF OF HISTORICAL LOWS - Claims7

 

INITIAL JOBLESS CLAIMS | BACKING UP OFF OF HISTORICAL LOWS - Claims8

 

INITIAL JOBLESS CLAIMS | BACKING UP OFF OF HISTORICAL LOWS - Claims9

 

INITIAL JOBLESS CLAIMS | BACKING UP OFF OF HISTORICAL LOWS - Claims10

 

INITIAL JOBLESS CLAIMS | BACKING UP OFF OF HISTORICAL LOWS - Claims11

 

INITIAL JOBLESS CLAIMS | BACKING UP OFF OF HISTORICAL LOWS - Claims19

 

Yield Spreads

The 2-10 spread fell -2 basis points WoW to 146 bps. 3Q15TD, the 2-10 spread is averaging 159 bps, which is higher by 1 bps relative to 2Q15.

 

INITIAL JOBLESS CLAIMS | BACKING UP OFF OF HISTORICAL LOWS - Claims15

 

INITIAL JOBLESS CLAIMS | BACKING UP OFF OF HISTORICAL LOWS - Claims16

 

Joshua Steiner, CFA

 

Jonathan Casteleyn, CFA, CMT

 

 

 

 


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