Weekly jobless claims stuck stubbornly high again this week and we think it had nothing to do with Easter, and a lot to do with small business layoff activity, despite government efforts to stymie that erosion.
Weekly Claims increased by 18K in the period ended April 3rd, to 460K, well above the economists' consensus for 436K. The four-week moving average rose 2,250, to 450,250, showing the stalling of labor activity in a bad state. The prior week's claims figure was also unfortunately revised higher, to 442K.
And remember, historically, the consensus forecast for this weekly metric is regularly and conspicuously close to the prior week's result. While we do not expect economists to give significant attention to the weekly forecasts, it also makes logical sense for there to be little change from week-to-week.
The Easter holiday plays havoc with many economic data points, but we are not so sure it would have a measurable impact in either direction on unemployment claims. Although this is contrary to what many on the Street are saying today, If anything we would expect the figure to come in skewed to the weak end. So, we are not buying into the Easter excuse here. Rather, we think small businesses are still laying off folks.
The four-week moving average rose 2,250, to 450,250, showing the stalling of labor activity, and ongoing layoffs. We expect these job cuts are happening in the small business sector, which is despite the government's attempts to stymie layoffs by providing tax incentives that have been geared specifically to inspire hiring at the small business level.
Larger firms are unlikely to be behind current or future layoffs, given bare bone inventory levels, improving demand for goods and services and a excessive degree of firing that occurred when the world was seemingly near its end.
The insured unemployment rate slipped 0.1% to 3.5%. This does not seem to make any sense, right? We suspect more people are falling out of the labor force than are entering the benefits system, which should be a governmental concern. The red-tape and faulty government employee management of operations like Welfare and the Labor Department cut too many people off for ridiculous reasons, and too often due to miscommunication.
Also, extended benefits may not be available in all US states, causing this data to lose count of some of our long-term unemployed in the process. Extended benefits were available in Alabama, Alaska, Arizona, California, Colorado, Connecticut, Delaware, the District of Columbia, Georgia, Idaho, Illinois, Indiana, Kansas, Kentucky, Maine, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, Ohio, Oregon, Pennsylvania, Puerto Rico, Rhode Island, South Carolina, Tennessee, Texas, Vermont, Virginia, Washington, West Virginia, and Wisconsin during the week ending March 20.
You will be surprised to hear, given census hiring expectations, that there were 21,025 former Federal civilian employees claiming unemployment insurance benefits for the week ending March 20. That marked just a small 1,776 decrease from the prior week, thus it was not significantly offset by census hiring. This should change in the weeks ahead. On the municipal level though, states and locals are letting go of folks en masse in order to meet stressed budgets.
The highest insured unemployment rates in the week ending March 20 were in Alaska (7.1 percent), Puerto Rico (6.1), Oregon (6.0), Wisconsin (5.7), Montana (5.6), Idaho (5.5), Michigan (5.4), Pennsylvania (5.4), Nevada (5.3), and Rhode Island (5.2).
The largest increases in initial claims for the week ending March 27 were in Texas (+3,640), Oregon (+2,412), New Jersey (+1,715), California (+1,275), and Kentucky (+926), while the largest decreases were in Michigan (-2,240), Illinois (-1,872), Oklahoma (-1,270), Missouri (-1,079), and North Carolina (-673).
However, on a positive note: UPS (NYSE:UPS) is reportedly seeking 25,000 new drivers, who will be paid an average of $75,000 per.
Disclosure: No positions