744,000 Americans filed for unemployment benefits last week, far more than the 680,000 consensus expected.
It was the second consecutive weekly rise. The previous week’s total was revised higher to 728,000.
Two weeks don’t make a trend, but this isn’t the best news considering initial claims had fallen below the pre-pandemic record during the week of March 20. Some heralded that as a milestone and a potential inflection point. Any (socially distant) celebrations may have been premature.
The four-week moving average rose to 723,750.
Once again, we see that labor market malaise is ongoing, despite the contention that more blockbuster NFP prints like March’s headline number are a foregone conclusion.
Continuing claims for the week ended March 27 were 3.73 million. That was also a disappointment. Consensus there was 3.64 million.
Still, ongoing claims are at the lowest level since March 21, 2020, during the earliest days of the panic.
Whether this is material for the narrative is debatable, but I would note that the miss on the headline in this week’s release wasn’t trivial. The range from three-dozen economists was 636,000 to 715,000. That means the actual print was worse than the most pessimistic guess. And, again, two weeks in a row is definitely the wrong direction. (Incidentally, the title of this article is a Planes, Trains & Automobiles reference, for any fans out there.)
If you forced me to say something meaningful, I suppose what I’d offer is this: Expectations for a rapid and uninterrupted labor market recovery in the US are now running very high. While one, or two or even three weeks of disappointing claims data likely won’t derail the overarching macro story, elevated expectations are inherently vulnerable to disappointment.
In this case, it’s a “just when you thought it was safe”-type dynamic.
Neal Page and Del Griffith listen to Richie Norris’ Grandmother play her favorite record, Slim Whitman’s “Indian Love Call,” when Larry Mann and Phil Cooper burst into the nursing home and announce that Jungle Jumper is loose. Del calls his buddy, Charles Koch, and everything soon returns to normal. (I decided not to comment on the previous article to ask if Putin, Koch, Slim, Waltons, Hartonos, etc. were “capital” but I couldn’t resist twice. Like the movie references based on the first night Neal and Del spend together in the motel? Classic Candy. His passing was a loss to comedy fans.)
I’ve got fewer packages arriving at my door on any given day. Does that mean there are less delivery drivers out there?
Companies that held off on hiring, layoffs, and much else during the pandemic are now taking the opportunity to cut and rebalance headcount and make other moves. They have a better sense of what their post-pandemic plans are, and are getting rid of the unneeded while hiring the needed.
I wouldn’t be surprised if layoffs, initial claims, hiring, job postings, office closures, capital investment, M&A, etc are all elevated at the same time, for some months or longer. There will be plenty of data points to cherry pick on any side of the narrative. For investors, I think being whipsawed is a major threat. Chasing data points without having an underlying thesis is a bad idea. Use data points to develop and test the thesis, not in lieu of the thesis.