What Led to the Rise of Initial Jobless Claims in January?
Negativity Abounds in January's US Economic Data
Initial jobless claims stood at 293,000 for the week ended January 16
According to the U.S. Department of Labor, initial jobless claims stood at 293,000 for the week ended January 16, 2016, an increase of 10,000 from the prior week’s revised level.
A rise in unemployment insurance claims suggests that the number of people depending on state funds is increasing. It also highlights weakness in employment opportunities and wages in the economy. A fall in wages and salaries leads to a fall in the buying power of the consumer.
With jobless claims increasing, a fall in consumer sentiment may be witnessed. The Consumer Discretionary Select Sector SPDR ETF (XLY) and the Consumer Staples Select Sector SPDR ETF (XLP) have fallen 0.48% and 1.3%, respectively, as of January 21, 2016.
Stocks such as Amazon (AMZN), Walt Disney (DIS), and PepsiCo (PEP) have fallen 0.49%, 3.2%, and 2.1%, respectively, over the past week as of January 21.
Continuing claims fell by 56,000 for the week ended January 9
Along with initial jobless claims, continuing claims data are released with a one-week time lag. While initial claims rose, continuing claims fell by 56,000 for the week ending January 9, 2016. Continuing claims fell to 2,208,000 compared to 2,264,000 in the previous week.
Recovery stagnated with increasing claimants
Initial jobless claims are an important coincident indicator, as they provide valuable insight regarding current labor market conditions. Initial jobless claims have been below 300,000 since January 2015, except for February, when they were 327,000. However, they inched toward the 300,000 mark for the week ended January 16, 2016.
A reading near the 300,000 mark indicates that the economy is deteriorating and is failing to regain strength. This is likely due to the slowdown in China and the fall in crude prices.
You may also be interested to read Manufacturing Activity in New York State Decreases.
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