11/9 Employment Data Update - 'Claims Up, Cuts Down' as Winter Approaches
A quick Thursday evening update on the employment data released today.
Don Johnson, Chief Economist (@DonMiami3
)
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Turning our attention toward the employment data released today - initial claims remained largely unchanged on a week-over-week (217K) basis while continuing claims posted a week/week increase to 1.834 million continuing claims.
(Initial claims below)
While there is definitely cause for concern in the rising continuing claims in our index:
we likely still have 2-3 more months to determine where claims are heading on a state-by-state basis. Unemployment has notched up to 3.9% driven by an increase in the youth unemployment rate and especially the prime age male unemployment rate (which is something many found interesting on X) but this period between months 12-15 following 10y3m inversion is really just a ‘wait and see’ period. This leads me into the point of the title ‘claims up, cuts down’ - while continuing claims are up in November thus far, November’s job cuts tracked by MacroEdge are trending down from October’s high headline # (we’re at 28,688 cuts in November with 12 workdays left). This will put us on pace for ~45-55,000 cuts this month if cuts continue at this pace. While there’s no doubt that these cuts are concerning, >100-125K cuts announced in a single month is really our ‘baseline’ for expecting further deterioration in claims (especially initial claims or (ICSA) as referred to in the dataset).
As the labor market continues to cool from record tightness - we’ll be keeping an eye on our job cuts data, the Challenger data, JOLTS data, and claims data to give us the best perspective on what lies ahead. Expect further cuts into winter - but it remains to be seen how much of an airbag the true job openings (along with demographics) will provide for us into the latter half of Q4 and into Q1. The new ‘bells’ of trends among things like the 16-19 unemployment rate as I mentioned in Sunday’s piece along with watching for a spike in the female unemployment rate (prime age) also need to be watched closely as well.
For now - it looks like we’ll be able to enjoy Thanksgiving without a labor market storm making landfall before the holiday.
Have a great rest of your week.
DJ