Jobless Claims Indicate Labor Stall

Last week, we tracked Weekly Initial Jobless Claims as they climbed above the important psychological threshold of 400K. While this week's report from the DOL showed claims eased from that level, it unfortunately illustrated a still troubling bump in claims trend. Last week, we theorized that the government shutdown threat may have played a role in pulling claims forward, and this week's data seems inconclusive in proving or disproving our theory.

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Jobless Claims Indicate Labor Stall

Weekly Initial Jobless Claims were reported for the week ending April 16 this morning. Claims eased from the prior week's revised mark of 416K, down to 403K. Unfortunately, that still pulled the four-week moving average of jobless claims higher by 2,250, to 399K.

This troubling trend, and the fact that claims have again found steady ground above the psychological threshold of 400K, could increasingly bother the stock market should it continue. The flow of jobless claims paralleled the action of the market in 2010. Of course, other economic improvements also coincided with and followed stock gains through the span, and we cannot say with certainty that deterioration in claims activity would harm stocks now. But it certainly makes logical sense that stocks would be depressed by deterioration in an already weak labor market.

Through the lagged April 9 period, insured unemployment stayed at 2.9%, where it was found the week before as well. Insured unemployment numbered 3,695,000, down 7,000 from the week before. However, the total number of unemployed Americans claiming benefits under all programs, including from unemployment insurance extensions, numbered 8.3 million.

In our last report covering weekly claims, we theorized that the prior week's bump up above 400K might have been tied to a rush of filers and the swift work of DOL employees to file paperwork ahead of the potential government shutdown. This week's data is somewhat inconclusive as to whether there was such an impact, as we would have looked for claims to have returned toward the 380K to 390K range as a result. Just 10K from that range, it's difficult to pass judgment either way.

It is not without possibility that the government shutdown factor combined with natural labor market softening, arising from global uncertainty, budget concern and rising resource pricing, to negatively impact weekly jobless claims. Gasoline prices especially have impacted consumer sentiment, and so hiring personnel at both large and small businesses would be expected to be tentative in progressing with growth now. We'll have to keep an eye on this report in the weeks ahead to discern if the trend is changing, and if labor gains are stalling.

The highest insured unemployment rates in the week ending April 2 were in Alaska (6.0 percent), Puerto Rico (5.0), Idaho (4.4), Oregon (4.4), Pennsylvania (4.3), Wisconsin (4.3), New Jersey (4.2), Rhode Island (4.2), California (4.1), Connecticut (4.1), and Montana (4.1).

The largest increases in initial claims for the week ending April 9 were in California (+25,646), North Carolina (+6,041), Kentucky (+5,202), Texas (+5,108), and Florida (+4,299), while the largest decreases were in Minnesota (-403), Iowa (-389), Maine (-55), and Wyoming (-9).

Article should interest investors in Paychex (Nasdaq: PAYX), Manpower (NYSE: MAN), Robert Half International (NYSE: RHI), 51Job Inc. (Nasdaq: JOBS), Monster World Wide (NYSE: MWW), Korn/Ferry International (NYSE: KFY), Administaff (NYSE: ASF), Kforce (Nasdaq: KFRC), TrueBlue (NYSE: TBI), Dice Holdings (NYSE: DHX), Kelly Services (Nasdaq: KELYA), SFN Group (NYSE: SFN), CDI Corp. (NYSE: CDI), Cross Country Healthcare (Nasdaq: CCRN), On Assignment (Nasdaq: ASGN), AMN Healthcare Services (NYSE: AHS), Barrett Business Services (Nasdaq: BBSI), Hudson Highland Group (Nasdaq: HHGP), StarTek (NYSE: SRT), RCM Technologies (Nasdaq: RCMT), VirtualScopics (Nasdaq: VSCP), American Surgical (OTC: ASRG.OB), Medical Connections (OTC: MCTH.OB), iGen Networks (OTC: IGEN.OB), St. Joseph (OTC: STJO.OB), General Employment Enterprises (NYSE: JOB), Total Neutraceutical (OTC: TNUS.OB), TeamStaff (Nasdaq: TSTF), Stratum (OTC: STTH.OB), Purespectrum (OTC: PSRU.OB), Corporate Resource Services (OTC: CRRS.OB), Bank of America (NYSE: BAC), J.P. Morgan Chase (NYSE: JPM), Goldman Sachs (NYSE: GS), Citigroup (NYSE: C), Morgan Stanley (NYSE: MS), Wells Fargo (NYSE: WFC), TD Bank (NYSE: TD), PNC Bank (NYSE: PNC), General Electric (NYSE: GE), Wal-Mart (NYSE: WMT), McDonald's (NYSE: MCD), Alcoa (NYSE: AA), American Express (NYSE: AXP), Boeing (NYSE: BA), Caterpillar (NYSE: CAT), Cisco Systems (Nasdaq: CSCO), Chevron (NYSE: CVX), DuPont (NYSE: DD), Walt Disney (NYSE: DIS), Home Depot (NYSE: HD), Hewlett-Packard (NYSE: HPQ), IBM (NYSE: IBM), Intel (Nasdaq: INTC), Johnson & Johnson (NYSE: JNJ), Kraft (NYSE: KFT), Coca-Cola (NYSE: KO), 3M (NYSE: MMM), Merck (NYSE: MRK), Microsoft (Nasdaq: MSFT), Pfizer (NYSE: PFE), Procter & Gamble (NYSE: PG), AT&T (NYSE: T), Travelers (NYSE: TRV), United Technologies (NYSE: UTX), Verizon (NYSE: VZ), Exxon Mobil (NYSE: XOM).

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