Thursday, December 8, 2022
Pre-market futures started out this morning in the green, and they’ve only gotten greener after weekly jobless claims were reported — holding steady on the week-over-week level but ricking up notably on the longer-term side. The Dow was +100 points ahead of the report, +170 points afterward. The S&P 500 went from +17 points to +25. The Nasdaq gained more than 20 points upon the report, to +75 points.
Initial Jobless Claims came in exactly as expected last week: 230K new claims, up slightly from an upwardly revised 226K the previous week — and also in-line with the four-week moving average. This is notably higher than what we were seeing back in late March, when new jobless claims were reaching 50-year lows. But we’ve also seen ebbs and flows with this data over the past year.
Continuing Claims rose to 1.67 million a week in arrears from new claims, up from 1.61 million reported the previous week. The cycle lows we saw were back in May, down around 1.3 million, so this is a notable jump over the past half-year. But historically, over the past several years — omitting the pandemic era which threw jobless claims into another stratosphere — anything under 2 million on longer-term jobless claims is consistent with a healthy labor market.
Thus, we can still see unemployment metrics drift upward for a while before we need to start worrying about the American jobs narrative. Employment is a lagging indicator on economic conditions, at least on the way down, because employers are reticent to lay off workers if they’re only going to need to hire them back in another month or two (again, don’t go by the Covid era — conditions were very different then).
By this I mean the Fed funds rate escalation ought not be reliant on the labor market collapsing before the Fed pauses or pivots on it. At the same time, a buyer’s market in labor (last week’s JOLTS report showed more than 10 million jobs are still unfilled in the U.S., with 4 million Americans per month still seeing fit to quit their jobs) fosters inflation. And as the November nonfarm payrolls data indicated last week, Average Hourly Earnings are up +5% year over year.
Perhaps the most useful aspect of weekly jobless claims totals is that we get more real-time data on the realities of the labor market. For instance, if we really were seeing a hemorrhage of workforce — based partly on Big Tech companies recently paring their payrolls demonstrably — we’d see it in these weekly numbers first. And thus far, the big employment drawdown in certain industries aren’t illustrating, in aggregate, any major headwinds in labor at this stage. Longer-term claims, however, are the most we’ve seen since February of this year — so we’ll keep an eye on this going forward.
Questions or comments about this article and/or its author? Click here>>
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New Jobless Claims Steady, Longer-Term Higher
Thursday, December 8, 2022
Pre-market futures started out this morning in the green, and they’ve only gotten greener after weekly jobless claims were reported — holding steady on the week-over-week level but ricking up notably on the longer-term side. The Dow was +100 points ahead of the report, +170 points afterward. The S&P 500 went from +17 points to +25. The Nasdaq gained more than 20 points upon the report, to +75 points.
Initial Jobless Claims came in exactly as expected last week: 230K new claims, up slightly from an upwardly revised 226K the previous week — and also in-line with the four-week moving average. This is notably higher than what we were seeing back in late March, when new jobless claims were reaching 50-year lows. But we’ve also seen ebbs and flows with this data over the past year.
Continuing Claims rose to 1.67 million a week in arrears from new claims, up from 1.61 million reported the previous week. The cycle lows we saw were back in May, down around 1.3 million, so this is a notable jump over the past half-year. But historically, over the past several years — omitting the pandemic era which threw jobless claims into another stratosphere — anything under 2 million on longer-term jobless claims is consistent with a healthy labor market.
Thus, we can still see unemployment metrics drift upward for a while before we need to start worrying about the American jobs narrative. Employment is a lagging indicator on economic conditions, at least on the way down, because employers are reticent to lay off workers if they’re only going to need to hire them back in another month or two (again, don’t go by the Covid era — conditions were very different then).
By this I mean the Fed funds rate escalation ought not be reliant on the labor market collapsing before the Fed pauses or pivots on it. At the same time, a buyer’s market in labor (last week’s JOLTS report showed more than 10 million jobs are still unfilled in the U.S., with 4 million Americans per month still seeing fit to quit their jobs) fosters inflation. And as the November nonfarm payrolls data indicated last week, Average Hourly Earnings are up +5% year over year.
Perhaps the most useful aspect of weekly jobless claims totals is that we get more real-time data on the realities of the labor market. For instance, if we really were seeing a hemorrhage of workforce — based partly on Big Tech companies recently paring their payrolls demonstrably — we’d see it in these weekly numbers first. And thus far, the big employment drawdown in certain industries aren’t illustrating, in aggregate, any major headwinds in labor at this stage. Longer-term claims, however, are the most we’ve seen since February of this year — so we’ll keep an eye on this going forward.
Questions or comments about this article and/or its author? Click here>>