Surprising Labor Results

Even with the big spike in COVID-19 cases in the Midwest and fears of a slowdown, the jobless claims report in the week of October 24th was good again. Make no mistake about this, if COVID-19 was causing weakness, we would have seen it by then. There have been two good reports in a row now. Seasonally adjusted initial claims fell from 791,000 to 751,000 which was below estimates for 758,000 and 1,000 above the low end of the consensus range.

Non-seasonally adjusted claims fell from 761,000 to 732,000 which is 1,000 above the cycle trough 3 weeks ago. COVID-19 might not have caused a spike in initial claims because the industries that are hurt the most by COVID-19 aren’t going to shed many new jobs. They already cut jobs and shuttered. It’s not like leisure and hospitality recovered and is stuttering again. It is still in a world of hurt. This latest COVID-19 outbreak just means the recovery will take longer to play out. Their financials will be stretched further. If the economy reopens next year, we will see initial claims go back to normal levels seen in prior expansions.  

As you can see from the chart above, the combination of PUAs and initial claims fell 1% which was the 6th decline in 7 weeks. PUA claims were up 15,000 to 360,000. PUAs don’t matter on a week to week basis because the data is inaccurate. It probably wasn’t accurate this week as PUAs in Nevada were up 45,000 to 58,000. Without that ridiculously large increase, national PUAs fell. The mistakes stick out like a sore thumb.

Continued Claims Fall More Than PEUCs Rise

In the week of October 17th, continued claims fell from 8.465 million to 7.756 million. That was the smallest decline since the week of September 12th. However, we are closing in on the May 2009 high of 6.635 million (excluding pandemic claims). The rate of decline in continued claims should fall in the next few weeks because there is less room for claims to fall and because we are ending the period where the main swath of job losers’ benefits will expire. October is 6 months from April which is when initial claims were very high. There weren’t as many job losers in May as April, so fewer people will lose benefits in November.

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Gary Anderson 4 weeks ago Contributor's comment

Those unemployment numbers are not good. What world does Upfina inhabit?

Frank Underwood 3 weeks ago Member's comment

If you read Fox, the labor market is doing great! If you read CNN, it's dismal.

Gary Anderson 3 weeks ago Contributor's comment

It is weak. No doubt. But Biden can do things to spur growth, like easing up on the tariff wars.