Fundamental Updates \Nick Nasad \ 11:20 AM EST \ March 11th, 2010
Jobless Claims Decline by 6K, Job Growth on the Horizon?
The number of Americans filing for unemployment benefits declined by 6K to 462K for the week ending March 6th. It was the second weekly drop in a row and can be a sign that the climb in weekly claims seen the past two months may be arresting.
The rise in January and February can be attributed to some temporary factors, including very strong winter weather in the country. For the economy to post positive job growth jobless claims have to continue their downtrend that started in March and fall convincingly below 450K. Therefore today’s data shows jobless claims staying stubbornly high.
The total number of people receiving unemployment benefits for the week ended February 27th rose to 4.56M from 4.52M. The prior week’s 4.52M was the lowest since January 2009. Also the continuing claims figure does not include the number of Americans receiving extended benefits under federal programs, which declined.
The non-farm payroll report – the US monthly jobs report – has shown that the economy continued to shed jobs following a one-month increase in November, though the declines have been mild in comparison to what we saw during the recession. It has mainly been sharp job losses in the construction sector the past two months (64K in Feb. and 77K in Jan.) which have kept the numbers negative, as the manufacturing and services sector have seen positive growth in jobs.
The unemployment rate rose to 10.1% in October, but since then declined to 9.7% in January and remained at the level in February. Economic indicators for the manufacturing and services sector show strong expansion (the ISM manufacturing index was at 56.5 and the ISM services index at 53.0 in Feb) so those sectors should continue to see job growth as we move forward. Also, an important temporary factor will benefit the labor market soon – the once-a-decade census. The government will be hiring 1.2 million temporary workers, with most of the jobs, about 700K, will require knocking on doors for six to 10 weeks from May to July. While the economy may already be adding jobs organically by this point, the massive increase in hiring will act to lower the unemployment rate by as much as 0.5%.
The high unemployment rate is a major reason the Fed has cited to keeping interest rates at their record lows for an extended period of time. If we see jobless claims continue their decline, and positive readings from the non-farm reports, its only a matter of time before the currency markets price in higher US interest rates which should benefit the US Dollar against the other major developed nations – Eur-zone, Japan, and UK – that have seen more stagnant growth or problems with sovereign debt issues as of late.
US Jobless Claims Decline 6K, Is Positive Job Growth on the Horizon?
Fundamental Updates \ Nick Nasad \ 11:20 AM EST \ March 11th, 2010Jobless Claims Decline by 6K, Job Growth on the Horizon?
The number of Americans filing for unemployment benefits declined by 6K to 462K for the week ending March 6th. It was the second weekly drop in a row and can be a sign that the climb in weekly claims seen the past two months may be arresting.
The rise in January and February can be attributed to some temporary factors, including very strong winter weather in the country. For the economy to post positive job growth jobless claims have to continue their downtrend that started in March and fall convincingly below 450K. Therefore today’s data shows jobless claims staying stubbornly high.
The total number of people receiving unemployment benefits for the week ended February 27th rose to 4.56M from 4.52M. The prior week’s 4.52M was the lowest since January 2009. Also the continuing claims figure does not include the number of Americans receiving extended benefits under federal programs, which declined.
The non-farm payroll report – the US monthly jobs report – has shown that the economy continued to shed jobs following a one-month increase in November, though the declines have been mild in comparison to what we saw during the recession. It has mainly been sharp job losses in the construction sector the past two months (64K in Feb. and 77K in Jan.) which have kept the numbers negative, as the manufacturing and services sector have seen positive growth in jobs.
The unemployment rate rose to 10.1% in October, but since then declined to 9.7% in January and remained at the level in February. Economic indicators for the manufacturing and services sector show strong expansion (the ISM manufacturing index was at 56.5 and the ISM services index at 53.0 in Feb) so those sectors should continue to see job growth as we move forward. Also, an important temporary factor will benefit the labor market soon – the once-a-decade census. The government will be hiring 1.2 million temporary workers, with most of the jobs, about 700K, will require knocking on doors for six to 10 weeks from May to July. While the economy may already be adding jobs organically by this point, the massive increase in hiring will act to lower the unemployment rate by as much as 0.5%.
The high unemployment rate is a major reason the Fed has cited to keeping interest rates at their record lows for an extended period of time. If we see jobless claims continue their decline, and positive readings from the non-farm reports, its only a matter of time before the currency markets price in higher US interest rates which should benefit the US Dollar against the other major developed nations – Eur-zone, Japan, and UK – that have seen more stagnant growth or problems with sovereign debt issues as of late.