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Takeaway: January Challenger job cuts rose +42% Y/Y. While job cuts continue in energy, they've also emerged in retail.

Editor's Note: Below is a complimentary excerpt from a research note written yesterday by our Financials team. Analysts Jonathan Casteleyn and Josh Steiner analyze yesterday's Challenger Job Cuts report, a key leading indicator for what's happening in the jobs market. If you would like more information about subscribing to our institutional research, please contact sales@hedgeye.com.

Think January Was Bad? Here's Why Next Month's Jobs Report May Be Even Worse - jobslatecycle

The Challenger Job Cut announcements moved up notably in January, as the below chart from our Macro Team shows. Energy jobs cut popped to 20,103 which is in-line with the fastest rates of job loss in Energy we've seen since the beginning of Energy's decline.

While the energy sector's woes have been ongoing for some time, the newer development is the deterioration of non-energy labor conditions. Announced job cuts ex-energy were 55,011 in January, which brings the total announced cuts to 75,114, which is the highest level by far in the post crisis period, notwithstanding the one-off military related labor adjustment in July 2015.

To put this in perspective, that brings total announced layoffs to +42% Y/Y in January with no underlying distortions present in the data. Outside of Energy, Retail was the second biggest loser with job cuts rising 15.5k Y/Y.

This emergent trend of worsening labor conditions is also manifest in the initial jobless claims data. Seasonally adjusted claims continued their upward trend last week, rising by 8k from the revised 277k to 285k, and the year-over-year rate of change in rolling NSA claims has essentially converged to zero, deteriorating from -3.2% in the previous week to just -0.8% in the latest week.

Think January Was Bad? Here's Why Next Month's Jobs Report May Be Even Worse - challenger