Thursday, December 12, 2019
This Thursday morning, as most Thursday mornings, we see an update to Initial Jobless Claims for the previous week, as well as longer-term Continuing Claims registered from the previous week. On the headline Initial Jobless Claims number, we see something of a surprise: a jump of 49K new claims, pushing it to 252K from the previous week’s unrevised 203K.
Holiday employment distractions, resulting in somewhat of a seasonal aberration on weekly jobless claims numbers going back many years, is likely the culprit in such a wide swing in weekly claims. That said, we went from very near the low long-term range of 200-225K two weeks ago to well above it last week — to 252K — hitting the highest single-week claims figure since the aftermath of Hurricane Harvey wiped out swaths of the economy in the Southeast U.S. temporarily in September 2017.
Continuing Claims — again, from the previous week — dipped from just under 1.7 million to 1.667 million in this morning’s print. This is among the historically low, not to mention placid, jobless claims we’ve grown accustomed to. It’s been almost 5 years since we saw initial jobless claims average 300K per week, back when continuing claims were averaging around 2.3 million per week.
Obviously, we don’t put too much weight on one week’s jobless claims numbers, especially not during skews in temporary employment in Retail and Shipping during holiday shopping season. However, should we continue to see elevated levels on new unemployment claims going through the first month of the new year, we would expect these figures to start showing up in monthly employment data, including the currently 50-year-low Unemployment Rate.
The November Producer Price Index (PPI) posted numbers this morning that were short of expectations: +0.0% on the headline was beneath the +0.2% expected and the +0.4% reported a month ago. Stripping out volatile food & energy costs, PPI dropped to -0.2%, where +0.2% was expected. Year over year, we see 1.3% growth on both headline and ex-food & energy costs.
Thus, another data point shows us that inflation displays no signs of affecting the domestic economy. Compared to yesterday’s mostly in-line Consumer Price Index (CPI), which showed modest growth in costs to the buyer of finished products and services (+0.3% headline, +0.2% core), producers look to be hit harder by economic conditions in the near term. Again, something to keep an eye on into the early part of the new year for signs of change.
For the Fed’s part, following keeping an interest rate steady at 1.75%, Chairman Jerome Powell inferred that rates would remain where they are into 2020, even if we do see inflation heating the economy up. And, with a potential December 15th tariff on $1.56 billion in new Chinese goods, Powell had already remarked the Fed would not respond to near-term trade headlines.
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