Jobless Claims Remain Stubborn - Real Time Insight

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Weekly jobless claims are only part of employment picture for the US.  For me they help offer a "free look" into the monthly BLS non-farm payrolls.

Since there is a two week lag in the "total claims" data, one must combine this data with other sources to realistically gauge the monthly BLS report.   It's also important to note that the BLS report only counts data up to the 12th of each and every month; so whatever the surveys say for the week of the 12th of September, those are the results that will be offered for that month.  For this reason I will usually focus on the 3rd and 4th week of each month's unemployment claims data to better indicate rough results for that month.

For the week ending September 15th, applications for unemployment benefits dropped by 3,000 to 382,000 (seasonally adjusted); expectations were for only 375,000 jobs.  We also saw an upward revision of the prior week's data of 3,000 more jobless claims, which negates last week's drop.

It doesn't take rocket science to see that jobless claims are on the rise and have been since July on a fairly steady pace. 

Even if you smooth the data out using a 4 week average, we saw a 2,000 person continuing claim increase to 377,750. 

Economist say that a number below 400,000 is enough to keep unemployment flat; but for growth I think we should see the 4 week average closer to 320k.

The average during the "baby recession" in the early part of the 21st century was right around 395k and we all know that markets struggled along with the economy during that time.

As of right now there are 5.17 million people receiving state or federal unemployment benefits in the U.S.!

I am still not sold on job health and job creation.

There has been a dearth of job creation this year.  Major companies that have seen their stock prices rise considerably are laying off tens of thousands of workers.  Just this morning Bank of America announced plans to cut 16,000 jobs before the end of the year. 

Jobs are at the top of the list for the Fed and were perhaps the motivating factor behind QE3, but I don't think that current efforts have translated to strength in the jobs space.

I will say that job creation looks better than it did back in the early 2000's; but the problem is that trends are not stable and corporate revenues are likely to remain stagnant or contract, which will force companies to continue to cut costs and jobs.

Negative outlooks from barometers like UPS, FedEx, Norfolk Southern, Cass Freight Index and more help confirm the "not so sexy" growth scenario and may be an indicator of more cuts to come.

In sum, I think the unemployment claims data is neither good nor horrible; it's just 'bleh'…which has been the overall theme for the past year. 

The question is whether QE3 and a post-election Washington can get consumers motivated.  I am still curious where the revenue growth is going to come from. 

Stalling is not flying; you can only stall for so long until you crash…


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This article appears in: Investing , Stocks
Referenced Symbols: FDX , UPS

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