Peak in Jobless?
Initial jobless claims were not as bad as described in the media today. The focus was on the increase from the prior month and that the total number of people receiving benefits reached a record. However, the rate of increase may have peaked, signaling a slow improvement in the labor market. It is too early to tell but the 4-week moving average decline is encouraging. New claims were as expected at 640k, up from 613k the week before. The 4-week moving average of initial claims, a less volatile measure, fell for the second week in a row to 647k from 657k, and may show that the rate of increase in jobless claims has peaked. Job losses continue to trend higher with the 13-week or 3 month average up 81% compared to a year ago. To put that in perspective, the highest equivalent increase post 9-11 was 47% and during the recession of 1991, 38%. However, as stated, we may see a stabilization shortly given the apparent peak in initial claims data. Weekly initial jobless claims data show the amount of people who have been fired in the past week and put in claims for unemployment benefit. This is a good representation of the current state of the labor market, a major factor in consumer spending plans. Existing home sales fell 3% in March compared to an expected decline of 1.5% and an increase last month of 4.9%. The purchase of foreclosed homes comprised 50% of all sales. The median price continues to fall, down 12% from a year ago. The inventory of unsold homes, a key indicator of future construction, increased to 9.8 months at the current sales pace from 9.7 the prior month. Three of four regions of the country showed a decline in sales last month, only the Midwest was unchanged. We have not seen a bottom yet but the rate of decline in housing appears to be slowing. An improvement in job prospects, or at least a deceleration in the rate of job losses, would go a long way to stabilizing the housing sector. The figure for existing home sales is the key housing sector indicator because existing homes comprise a full 85% of all home sales. The data is a slightly lagging because it is based on when buyers close the deal on properties, up to two months after the contract has been signed.
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