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Economic Data Gradually Dwindles: Jobless Claims, Productivity & More

Thursday, November 3, 2022

New weekly jobless claims are out this morning, with Initial Jobless Claims reaching 217K, beneath expectations and 1000 fewer claims than the upwardly revised 218K the previous week. Continuing Claims reached 1.485 million -- higher than recent reads, but historically still pretty low.

We’ve been pretty much range-bound on either side of 200K initial claims since August or so. These are still historically low figures, continuing to demonstrate a frustratingly healthy labor market.

I’m kidding, of course — countries all over the world wish they had our problems. But without some clear and sustained decay in employment, the Fed has already said as of yesterday afternoon it’s going to keep the hammer down to defeat inflation. Fed Chair Powell did acknowledge the workforce may be the very last indicator of an economic slowdown, but nevertheless, here we are.

Tomorrow’s big non-farm payroll report from the U.S. government expects to bring in around 200K new jobs last month. Yesterday’s private-sector payroll report from ADP ADP showed better-than-expected job growth, especially in Services and particularly Leisure & Hospitality. There was negative job growth in Manufacturing and Information sectors last month in the ADP print; we’ll make sure to compare notes tomorrow, even though we all know these monthly job reports don’t always present in-line numbers in real time.

The other side of employment is productivity, and Q3 Productivity numbers are out this morning, as well. A headline of +0.3% is 10 basis points (bps) lower than expectations, but swung to a positive from the previous month’s slightly downwardly revised -4.1% in Q2. These are preliminary seasonally adjusted, annualized figures, and can be expected to be revised over time.

Unit Labor Costs for Q3 also came in lower than expected — a rarity; usually these reports are somewhat inverse of one another — +3.5% on headline, below the +4.0% economists were looking for. The Q2 revision was significant: +8.9%, still high, but well off the +10.2% we saw at our last look. For some perspective, earlier this year we registered unit labor costs +12.7%; thus, while employment metrics remain strong, wage growth is not following suit — at least not to the same extent.

Our Foreign Trade Deficit for September came in this morning at -$73.3 billion, worse than expectations by a billion dollars or so, following an improved revision of -$65.7 billion from -$67.4 billion previously reported. Last month’s revision now represents a cycle ebb; the worst foreign trade deficit also happened to be an all-time low -$106 billion back in March of this year. So, while we still have improvements to make here, we’ve finally gotten a little slack in foreign trade over the past six months.

After today’s open, we’ll take a look at ISM Services for October and Factory Orders for September. With a Fed meeting still in our rearview mirror, these data points will not be directly consequential, just as those reported from this morning won’t be. But, as we do here at Ahead of Wall Street and the Fed does in its own way, we’re keeping track of incremental changes to these economic prints over time in order to help illustrate what our market will look like in the future. Pre-market futures are down again today, by the way, looking for a positive catalyst now that Powell has pooped our party.

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