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Jobless Claims Back Up to 898K, Imports Tempered

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Thursday, October 15, 2020

Like nearly all Thursday mornings, we get a fresh look at the past week’s Initial Jobless Claims numbers. These had been dwindling down slowly over time, with the rate of change noticeably losing momentum and plateauing around the mid-800K level. This time it’s different: we saw new claims pop up to 898K last week, much higher than the 825K anticipated and the slightly upwardly revised 845K the previous week.

Continuing Claims, reporting a week in arrears (the week of October 3 vs. the week of October 10), paint another picture: 10.02 million longer-term jobless claims was the lowest one-week read since mid-March, before the coronavirus pandemic crushed the U.S. labor market. This is also a big step down from the previous week’s upwardly revised 11.18 million; apparently, longer-term claims shed a full million applicants in the course of a week. Though it’s hard to be happy about 10 million Americans continually out of work, that this headline can come down this far this fast must be considered good news.

As we saw in the monthly non-farm payroll report for September, however, job gains seem to be drying up at a more rapid pace than they had previously. Further, many of the job gains that do exist are happening in particular industries like hospitalities and healthcare at multiples of what would be considered normal healthy monthly gains. This not only gives an imbalanced portrait of our labor market overall, but the worry is these job gains — especially in restaurants and hotels, now that colder weather months are approaching — may be less than fully sustainable.

The Philly Fed Index for October, however, performed terrifically: 32.3 is roughly 2.5x the expected 13.5, and more than double the 15.0 reported for September. This headline figure is the highest production rate for the municipality of Philadelphia since February, before the pandemic implosion.

Empire State Index numbers for October have also come out this morning, posting a 10.5 — below the 17.0 in September that neared the highest levels in the Covid era. These figures — both Philly Fed and Empire State (which tracks production of New York State) — tend to carry a certain level of volatility higher than most monthly economic metrics. The Philly Fed has posted positive numbers since May; Empire State since June.

Import Prices for September also hit the tape this morning: +0.3% on the headline was a fraction of the 1.0% reported in August. Subtracting volatile petrol prices, this figure rises to +0.7%. Food and beverages, as well as other capital goods, were up on the month, tempered by a 2.9% drop in fuel prices. This represents the first fall in monthly petrol prices since April. Exports rose 0.6% on the month, doubling the +0.3% expected.

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