The headline, fictional, seasonally adjusted (SA) number of initial unemployment claims for last week came in at 295,000, missing the Wall Street conomist crowd consensus guess of 288,000. Behind the headline numbers, claims continued to make record lows, below the lowest levels reached at the top of the housing bubble. Meanwhile, the number of states reporting a trend of increasing claims has been increasing. The days of record low national readings appear to be approaching an end.
The Department of Labor also reports actual, unmanipulated numbers. This week it said, “The advance number of actual initial claims under state programs, unadjusted, totaled 279,097 in the week ending April 18, a decrease of 28,102 (or -9.1 percent) from the previous week. The seasonal factors had expected a
decrease of 29,369 (or -9.6 percent) from the previous week. There were 299,182 initial claims in the comparable week in 2014.”
There were 1,989 claims per million of nonfarm payroll employees. This was a record low, below the April 2006 level of 2,014 at the peak of the housing bubble.
On the basis of the week to week change it was a mixed bag. Claims normally decline in this week of April. The weekly change was worse than average for this week. The actual decline of 28,000 (rounded) compared with the 10 year average decrease for that week of 39,000 (rounded). However, claims decreased by just 20,000 in the comparable week last year. So, while not as good as the average, the current week was stronger than last year.
In terms of the trend over the longer term, actual claims were 6.7% lower than the same week a year ago. Since 2010 the annual change rate has mostly fluctuated between -5% and -15%. The current number is within the range.
At the last bubble peak in 2006, claims began to increase late in that year. The housing bubble had already peaked a few months earlier but the stock market continued on its merry way for 9 more months, not finally ending its run until September 2007. In that instance a clear breakout in the number of claims toward the end of 2006 gave plenty of advance warning that all was not well before stock investors got a clue. Conversely, at the 2000 top, claims had given little advance warning. They began to break out concurrently with the top in stock prices through midyear 2000.
The oil price collapse may be analogous to the housing bubble peak in 2006.
The impact of the oil price collapse started to show up in state claims data in the November-January period. While most states show the level of initial claims well below the levels of a year ago, in the oil producing states of Texas, North Dakota, and Louisiana, claims have been above year ago levels since the turn of the year. North Dakota and Louisiana claims first increased above the year ago level in November. Texas reversed in late January. In the most current state data, for the April 11 week, claims in these states were well above year ago levels. Texas was up 17% (vs. 14% in the previous week), Louisiana +24% (vs. +9%), and North Dakota +69% (vs. +87%). Another oil producing state, Oklahoma, was up by 26.8% (vs. +30%).
With its huge and widely diversified economy, Texas could be the harbinger of things to come for the entire nation as the ripple effects of the oil collapse and the disappearance of those $85,000 per year jobs spread through the US economy.
In the April 11 week, 22 states had more claims than in the same week in 2014. That’s up from 11 in the week ended April 4. At the end of 2014 only 8 were up year to year. At the end of the third quarter of 2014 there were just 5. This is akin to a stock market advance-decline line in a negative divergence from an advance in the market averages. It may be a warning sign of deterioration that is not apparent in the topline numbers.
I track the daily real time Federal Withholding Tax data in the Wall Street Examiner Professional Edition. The year to year growth rate in withholding taxes in real time is running slightly above 5% in nominal terms. This is down from a peak of over 8% in February, but it remains a strong number that supports the likelihood of a solid gain in payrolls for April.
The jobs data will continue to encourage the Fed to engage in the charade of pretending to raise interest rates sooner rather than later.