Labor Market Analysis – Jobless Claims Spike Examined

Jobs Data Analysis

We received two reports this week that offer a mixed message on the state of the labor market. This morning, Weekly Initial Jobless Claims spiked back up above the 400K threshold. Meanwhile, yesterday, the Labor Department reported that job openings had improved through February. While the periods measured differ, this still left some investors with a view of a labor market in limbo. Our analytical outside-the-box style has us weighing two possible drivers of the spike in claims, one positive and one negative.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

Relative Tickers: NYSE: RHI, NYSE: KFY, NYSE: MAN, NYSE: MWW, Nasdaq: KELYA, Nasdaq: JOBS, NYSE: JOB, Nasdaq: CECO, Nasdaq: PAYX, NYSE: ASF, Nasdaq: KFRC, NYSE: TBI, NYSE: DHX, NYSE: SFN, NYSE: CDI, Nasdaq: CCRN, Nasdaq: ASGN, NYSE: AHS, Nasdaq: BBSI, Nasdaq: HHGP, NYSE: SRT, Nasdaq: RCMT, Nasdaq: VSCP, OTC: ASRG.OB, OTC: MCTH.OB, OTC: IGEN.OB, OTC: STJO.OB, OTC: TNUS.OB, Nasdaq: TSTF, OTC: STTH.OB, OTC: PSRU.OB, OTC: CRRS.OB

Labor Market Analysis – Jobless Claims Spike Examined

The market celebrated on the open yesterday, perhaps partly on news that job openings had increased in February, rising by 12.8%, to 3.1 million. Today though, the Labor Department reported that weekly jobless claims spiked up to over 400K, an important psychological threshold we had only just gotten used to sitting under.

Weekly Jobless Claims

Today's DOL data covering the period ending April 9 showed weekly initial jobless claims spiked by 27,000, to 412K. This comes after several weeks of gradual improvement deeper below the psychological threshold of 400K. Our intuition has us weighing two distinct possibilities with regard to this change for the worse.

This could be an unfortunate result of global instability and increased uncertainty, which has contributed to a loss of consumer confidence with the help of rising gasoline prices (again the result of global uncertainty). Perhaps this factor is likewise impacting business decisions including workforce. Certainly, recent data from Wholesalers and Businesses shows sales rising short of inventory build, which we view as an indicator of spending slippage. Thus, economic deceleration could be the cause, but it would seem early to be driving layoffs.

This strange spike was so important that it nearly took the four-week moving average for jobless claims above the 400K threshold as well. The average rose 5,500, to a level of 395,750. There's one anomalous possibility we can see potentially behind the sudden increase. While we pointed to the near government shutdown as a possible driver for anomalous change in mortgage filings through the relative period, we wonder if perhaps a rush to handle paperwork contributed here as well. Maybe compassionate government workers pushed a little harder last week, to ensure those in need would be taken care of.

It would seem that we will know for sure if this week's increase was anomalous or not when we get next week's data. If it was merely an anomalous paperwork issue, then there should be a light claims figure to balance next week. Unfortunately, if it is the economy, then we should note another poor result next week.

Important Data FYI

Insured unemployment is measured for a lagging period, and was shown to have improved a tenth of a point, to 2.9% in the April 2 period. Insured unemployment fell by 58,000 in that span, to 3.68 million. However, the true number of insured unemployed Americans under all programs, including the benefit extension programs, numbered 8,517,545 in the March 26 period. According to the Household Survey, within the Employment Situation Report, the number of unemployed Americans was 13.5 million in March.

The highest insured unemployment rates in the week ending March 26 were in Alaska (6.2 percent), Pennsylvania (4.8), Puerto Rico (4.8), Oregon (4.7), Montana (4.6), Rhode Island (4.6), Wisconsin (4.6), Idaho (4.5), New Jersey (4.4), and California (4.3).

The largest increases in initial claims for the week ending April 2 were in Massachusetts (+2,575), Pennsylvania (+1,606), Ohio (+1,094), Illinois (1,013), and Georgia (+625), while the largest decreases were in California (-8,095), Texas (-2,913), Florida (-1,731), Missouri (-898), and Oregon (-733).

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).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.