The BLS reported that for the week ending Nov. 28, seasonally adjusted initial jobless claims were 457,000. Last week's number was revised down 4,000 to 462,000. The 4-week moving average was 481,250, a decrease of 14,250 from the previous week's revised average of 495,500. The 4 week seasonally adjusted moving average is now about 23% lower than the peak of 658,750 on April 3 of this year. Although the seasonal adjustment might now be overstating the decline, the trend certainly continues downward.
Unadjusted, there were 460,989 new claims, a decrease of 78,263 from the week before, and well below the 535,730 unadjusted initial claims in the same week last year. In unadjusted terms, this was the best new claims number, relative to normal seasonal adjustment, in well over a year.
Because the BLS normally surveys business payrolls in the week ending the 12th of the month, this won't show up until the December jobs number is reported a month from now (i.e., not tomorrow). According to my previous research, with almost two months' of jobless claims more than 16% off the high, and over one month more than 20% off the high, this morning's jobless claims number would indicate that jobs are actually being added to the economy this month.
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If the jobless claims data was great, the ISM services index was equally bad:
“The NMI (Non-Manufacturing Index) registered 48.7 percent in November, 1.9 percentage points lower than the 50.6 percent registered in October, indicating contraction in the non-manufacturing sector after two consecutive months of expansion. The Non-Manufacturing Business Activity Index decreased 5.6 percentage points to 49.6 percent, reflecting contraction after three consecutive months of growth. The New Orders Index decreased 0.5 percentage point to 55.1 percent, and the Employment Index increased 0.5 percentage point to 41.6 percent. The Prices Index increased 4.8 percentage points to 57.8 percent in November, indicating an increase in prices paid from October. According to the NMI, six non-manufacturing industries reported growth in November. Respondents’ comments remain cautious about business conditions and reflect concern over the length of time for economic recovery.”
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WHAT RESPONDENTS ARE SAYING …
“Capital markets remain very tight; lenders are not releasing funds for development projects, limiting expansion.” (Accommodation & Food Services)
“Fourth quarter still looking grim, but potential upturn for Q1 2010.” (Professional, Scientific & Technical Services)
“No one trusts that the recovery is real. Seems everything and everyone is in a holding pattern.” (Public Administration)
“Business is still flat.” (Wholesale Trade)
“U.S. business remains better than 2007 levels, although it’s been through personnel and cost reductions that we are now profitable. Business continues to be about 8 percent below 2008 levels.” (Real Estate, Rental & Leasing)
[note: my emphasis]
This is a poor report. The employment component in particular, while slightly better than last month, makes for the worst 3 month average since the teeth of the recession earlier this year. So far, consumer spending hasn't picked up enough to stop the onslaught of business layoffs in this part of economy, most likely among smaller firms.
5 comments:
Great numbers in jobless claims...the shape of the nonadjusted jobless claims looks
very favorable..but the ISM non manufacturing business activity index is bad news....
DeLong might be "right", as claims are dropping pretty fast towards that 400,000 mark. Having said that, I personally believe that the seasonal adjustments being used are off and that we are pretty close to positive now.
The level of claims that produces rising employment depends on the rate of hiring. If we were in a normal recovery, with normal rates of hiring, NDD's estimate of 460,000 first time claims producing employment growth would be correct.
However, hiring has been slowing down along with firing since last winter. Hiring off the unemployment rolls has only picked up a bit recently -- running at 62% of normal in the last 4 weeks, vs a low of 50% of seasonal normal in late September-early October and down from 80-90% last winter/spring, when firing was peaking.
If hiring doesn't pick up further, we'll have to get to 400,000 first-time claims to see employment growth.
It seems like a lot of businesses are playing wait-and-see. They're reluctant to make further staff reductions, but are waiting to see if the recovery is real before hiring.
The ISM report suggests hiring may not pick up quickly. As we get into the heavy firing season after Christmas, first time claims may look "good" due to seasonal adjustment but still be consistent with decreasing employment.
This is not meant to mitigate the poor ISM non manufacturing report
but the new orders portion and business activity portion move very
very closely together. This time has produced the widest gap in its
history 5.5. Either the business activity portion recovers or the new orders portion drops. I am betting the business activity portion will recover.
I had missed the drop in the weekly number.
I am still skeptical, it is worth remembering that V's are created by exceeded expectations at the bottom. These numbers are turning much faster than people are expecting, and IF they act accordingly 2010 may really surprise.
Note also that the dollar is going UP on the news, which if it holds may help with commodities....
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