New weekly jobless claims saw a huge leap last week with 439,000 people filing for unemployment benefits. This reading is the highest in 18 months and clearly is a standout when you look at the chart below.
Initial claims from two weeks ago were revised up to 361,000 from an original reading of 355,000.
The onslaught of 78,000 more filings than the week prior brought the average of new claims filed over the past month up 11,750 to 383,750. The four-week average is often used to spot trends in this typically volatile data and up until this week has been trending lower.
Continuing claims increased by 171,000 to a seasonally adjusted 3.33 million in the week ended Nov. 3.
Total claims, which have a lag of 2 weeks, showed that roughly 4.98 million people received some kind of state or federal benefit in the week ended Oct. 27, which was down 100,423 from the prior week. The total claims data has yet to absorb the large number of new filings.
Trend or Blip?
The Labor Department citied an abnormal surge in claims in areas of the country that were in the path of Sandy. Even though one would have expected us to see a jump last week, the devastation and chaos along with the closure of government offices and widespread power outages may have caused an initial delay for most people to file claims.
Looking at the chart, it’s clear to see that claims have been on the decline over the past month. This trend is commensurate with the increases in hiring we have seen in the ADP and BLS reports.
From my vantage point, this nasty reading is clearly caused by Sandy’s destruction; the question is how long and how large will this “blip” become.
In conversations with friends in the NYC area, many of them are just getting back to work as power and facilities are still being repaired. In some areas along the Jersey shore and in Long Island businesses are still without power, severely damaged or were completely wiped out.
My fear is that Sandy might be a trigger that changes this trend as some business owners’ decide to close their doors forever, downsize their business or move. This could be exacerbated by looming fiscal cliff fears and thus keep pressure on unemployment claims and send new non-farm payrolls lower.
The financial pressures and stress that many folks are feeling in the aftermath of the storm could (and most likely will) change the near term jobs trajectory (which has been slowly improving).
Do you think last week’s jump is just a blip that will go away next week or could Sandy and fiscal cliff reverse our anemic job growth for months to come?
I am leaning towards the latter…
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