Weekly initial jobless claims have been a hot mess in July, due to adjustments to the data for plant closings that proved hard to predict. You would expect layoffs to be light in the heat of summer, but with several manufacturing data points showing employer discomfort with their labor counts -- and what that implies about the rest of the job market -- things could be about to change. Wednesday's ADP report offered some hope, with ADP's estimate indicating a pickup in hiring, but ADP data has cried wolf too often to be trusted.
After last week's reported sharp drop-off in jobless claims, we were expecting a reversion to the mean this week, and that mean is getting meaner. For the week ended July 28, weekly initial jobless claims increased 8,000 to 365,000. Last week's dramatic drop (-35,000) was subject to revision, with the initially reported 353,000 count hiked a bit to 357,000.
The four-week moving average here has been infected by the mistimed adjustment for plant closings at Ford (F), General Motors (GM) and others. It would normally be a useful go-to figure in such an instance, but I'm confident it is also understated and will remain so until the bad weeks age out. The four-week moving average fell by 2,750 in the reported period, to 365,500.
Insured unemployment stuck at 2.6% in the lagged period ended July 21. The actual number of insured unemployed workers declined by 19,000, to 3.272 million, for the same period. The total number of Americans receiving a benefit of some sort, including through the extensions program, fell by 69,672, to 5.964 million Americans in the period ended July 14. However, I am urged by the silent and overlooked Americans whose extension benefits have run out to remind you about them.
The stocks most closely affected by this data are the staffing and outsourcing companies. There are plenty of other reasons for the shares to be lower today though, with the SPDR S&P 500 (SPY) down a half point on the inaction of the European Central Bank. Still, the employment servicers are showing oversized losses today for good reason.
Company & Ticker
Wednesday Morning % Change
Robert Half Int'l (RHI)
Korn Ferry Int'l (KFY)
Monster Worldwide (MWW)
Kelly Services (KELYA)
On Assignment (ASGN)
51job Inc. (JOBS)
Heidrick & Struggles Int'l (HSII)
Kelly Services proves to be a stalwart here because of its specialty in temporary worker provision. The underperformance of the rest of these companies makes sense due to their cyclical nature and ties to the labor market. With the economy deteriorating and with central bankers fumbling around things, there's little reason to place bets here now.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.