Initial jobless claims rose 7,000 to a much higher-than-expected level of 320,000 in the February 28 week. The increase lifts the 4-week average by a steep 10,250 to 304,750. The average is trending roughly 5,000 higher than a month ago in a comparison that does not point to improvement for the labor market.
Continuing claims, which are reported with a 1-week lag, are also moving higher, up 17,000 in data for the February 21 week to 2.421 million. The 4-week average is up 4,000 to a 2.404 million level that is slightly higher than a month ago in another comparison that does not point to improvement for the labor market. The unemployment rate for insured employees is unchanged at a recovery low of 1.8 percent.
Today’s report is a disappointment but shouldn’t affect expectations for tomorrow’s employment report, a report that is not expected to show gains relative to January.
Challenger Job-Cut Report
Challenger’s layoff count has been on the rise so far this year, at 50,579 in February vs 53,041 in January. This compares with a monthly average during the fourth quarter of just below 40,000. The count in February last year was 41,835. The energy sector, as it was in January, was the chief source of layoffs in February followed by retail and industrial goods.
This tells me business probably ‘over hired’ as employment gains have exceeded output gains:
Productivity and Costs
More downward GDP revisions on the way:
Down 0.2 percent, factory orders fell for a 6th straight month in January. The decline is centered in non-durables which, in price effects tied to energy, fell 3.1 percent in the month, offsetting an unrevised 2.8 percent gain for durables (initial durables data released last week).
The rise in durables reflects a swing higher in the always volatile transportation component which, reflecting a big gain for commercial aircraft, jumped 9.7 percent.
Other details include a 2.0 percent decline for shipments, a decline that gets production off to a slow start for the first quarter. Inventories fell 0.4 percent in the month with unfilled orders down 0.2 percent.
The factory sector has not been contributing to economic growth, the result of weakness in the oil patch and weakness in foreign demand.