logo
  Join        Login             Stock Quote

Another Jobless Claims Report, Another Reason To Wonder

 November 09, 2012 09:36 AM


Did Hurricane Sandy distort last week's jobless claims data? Possibly. One argument is that the storm kept people away from the unemployment offices and so last week's decline in new filings for unemployment benefits dispensed an artificially low number. "Extreme weather can hold down filings initially, with people initially preoccupied," says Jim O'Sullivan, chief U.S. economist at High Frequency Economics. "Claims are likely to be boosted in the next few weeks by hurricane-related job losses."

[Related -The SEC Does Some Things to Money Market Funds]

It's a reasonable point, but it seems that there's always a new reason to dismiss the fall in claims. The reality is that new filings for jobless benefits have been trending lower for well over a year. It could be all over next week, but it's premature to say that the jig is up, even in the wake of one of the worst hurricanes in decades.

"When you see bad weather, there's usually a drop in claims, and then you typically see a rebound in the next few weeks," observes Scott Brown, chief economist at Raymond James & Associates. "Underneath the surface, job destruction has been trending very low. Layoffs aren't the problem -- it's the relatively weak pace of job creation."

[Related -Are the Reds in the Red?]

That's a fair point as well, and probably closer to the truth. But the potential for Sandy-related blowback can't be ruled out. "You'll undoubtedly get a spike in unemployment claims that has not hit yet; it did not hit in the numbers ... because everybody was still in the midst of the aftermath of the storm, but, you know, expect the next several weeks to show a significant spike," predicts Liz Ann Sonders, Charles Schwab's chief investment strategist.

Perhaps, but no matter what next week's report says, let's not read too much into one data point, especially the seasonally adjusted one. A better way to look at the data is to compare the unadjusted numbers on a year-over-year basis, and through time. By that standard it's not obvious that the modest pace of decline has run its course. New filings are still falling at roughly 10% a year before seasonal adjustment. Last week's nearly 12% year-over-year drop may be an anomaly; if it is, we'll see the payback in the weeks ahead. But then comes the question of whether the declining trend will resume. No doubt there'll be another distorting factor to consider by then.

Meantime, let's not forget that payrolls data for October perked up a bit, and the manufacturing and services sectors (via the surveys published by the Institute for Supply Management) imply that there's a decent amount of momentum in the economy.

Is it all a head fake? Never say never, but Rome wasn't built in a day and periods of economic growth—even relatively weak recoveries—don't evaporate while you step out for coffee. Let's see what next week's reports tell us, including the October updates on retail sales (Wednesday, Nov 14) and industrial production (Friday, Nov 16).

Meantime, there are plenty of talking points to go around. The good news is that the same can be said for mildly encouraging economic data--assuming we can believe it.

iOnTheMarket Premium
Advertisement

Advertisement


Post Comment -- Login is required to post message
Name:  
Alert for new comments:
Your email:
Your Website:
Title:
Comments:
 

rss feed

Latest Stories

article imageChipotle Mexican Grill, Inc. (CMG) Q2 Earnings Preview: Will Higher Traffic Offset Higher Costs the Key

Chipotle Mexican Grill, Inc. (NYSE:CMG) will host a conference call to discuss second quarter 2014 read on...

article imageNetflix, Inc. (NFLX) Q2 Earnings Preview: The Ruby Month for a Reason

Netflix, Inc. (NASDAQ:NFLX) will post its second-quarter 2014 financial results and business outlook on its read on...

article imageLadenburg Thalmann Financial Services (NYSEMKT:LTS): Heavy, Durable Insider Buying

Ahh, but any worries over price levels didn’t stop multiple insiders at Ladenburg Thalmann Financial read on...

article imageInternational Business Machines Corp. (IBM) Q2 Earnings Preview: Small Beat and Pop

International Business Machines Corp. (NYSE:IBM) will host a conference call Wednesday, Jul. 16, 2014 at read on...

Advertisement
Popular Articles

Advertisement
Daily Sector Scan
Partner Center

Related Articles:

Jobless Claims Drop To 8-Year Low
More Articles on: Economics Data



Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.