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Takeaway: The latest labor market data shows the highest rate of W/W claims growth YTD coupled with a +155% M/M rise in energy job cuts for April.

Initial Claims | Energy Is Still Bleeding - Claims1

This morning's labor data shows two notable upticks. Seasonally adjusted initial claims rose +17k week over week to 274k, which is the largest week-over-week increase so far in 2016. Additionally, the first chart below shows that Challenger Job Cuts in the energy sector rose +155% in April to 20k after falling to 8k in March. Moreover, the ADP survey out Wednesday showed a weaker-than-expected +156k jobs added in April vs. consensus of 193k and the prior print of 194k (downwardly revised from 200k).

Initial Claims | Energy Is Still Bleeding - Claims17

The Data

Prior to revision, initial jobless claims rose 17k to 274k from 257k WoW. The prior week's number was not revised. Meanwhile, the 4-week rolling average of seasonally-adjusted claims rose 2k WoW to 258k.

The 4-week rolling average of NSA claims, another way of evaluating the data, was -6.9% lower YoY, which is a sequential deterioration versus the previous week's YoY change of -8.2%

Initial Claims | Energy Is Still Bleeding - Claims2

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Yield Spreads

The 2-10 spread was unchanged WoW at 104 bps. 2Q16TD, the 2-10 spread is averaging 104 bps, which is lower by -4 bps relative to 1Q15.

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Initial Claims | Energy Is Still Bleeding - Claims16

Joshua Steiner, CFA

Jonathan Casteleyn, CFA, CMT