|
Editor's Note: Below is a complimentary research note written by Financials analysts Josh Steiner and Drago Malesevic. To access our institutional research please email sales@hedgeye.com. |
Given the now fluid nature of the labor market, we have relaunched our weekly initial jobless claims tracker to better monitor the health of the U.S. labor market.
Note, we plan to publish our claims tracker on a dynamic basis, contingent with evolving conditions in the domestic economy, i.e. more frequently during periods of acute or chronic stress and less frequently in periods of relative calm.
HEDGEYE FINANCIALS WEEKLY LABOR MARKET READING
Initial jobless claims (SA) printed another 5.24 million this week, with last week's number having been revised down by ~45K. Meanwhile, Continued Claims (SA) shot up to an all-time high of 11.97 million.
Recall, from our note last week:
|
Until now, most investors have likely never given much thought to the difference between an initial jobless claim and a continuing claim. It's understandable, we hadn't either until we noticed the gap that emerged in last week's print. Two weeks ago, initial claims were 3.3 million, but the following week continuing claims increased by "just" 1.2 million. How could this be? The answer has to do with the technical distinction between those permanently laid off and those temporarily laid off (aka furloughed). The BLS counts both categories of workers under initial claims, but only the former as continuing claims. Technically, this is because continuing claims are defined as "insured unemployed" and the BLS doesn't consider furloughed workers (temporarily unemployed) to be unemployed. As such, we can calculate the share of workers being permanently laid off by comparing week 1's initial claims number to week 2's change in continuing claims. Two weeks ago initial claims were 3.3M but last week's continuing claims number only increased by 1.2M. Roughly 1/3 of those job losses were permanent. Last week, however, initial claims were 6.8M and this week's continuing claims number increased by 4.5M. This suggests permanent layoffs were closer to 2/3. As we see it, that's a problem because the market is assuming that most of these layoffs will be temporary and these people will be quickly rehired following the crisis. The shift towards permanent layoffs, however, suggests otherwise. |
Accordingly, for the most recent week, the week ended April 3rd, the share of permanent layoffs was 68%, up from 64% in the week prior.
Initial unemployment insurance claims, released this morning, and filed in the week ending April 10th, 2020 to indicate loss of employment in the week ending April 3rd, 2020, were 5.24 million and 4.97 million on a seasonally-adjusted and non-adjusted basis, respectively.
Meanwhile, continued unemployment insurance claims, the total number of people claiming benefits in all programs for the week ending April 3rd, 2020, were 11.97 million and 12.53 million on a seasonally-adjusted and non-adjusted basis, respectively.
