Thursday, July 16, 2015

Claims Data During Auto Refit (Week 28)

The claims data released this morning were extraordinary.

The very strong fully recovered labor market is still evident (and has been so for over  a year now), but this week, the 28th in the year, is the week that auto refits take place and auto and auto parts layoff their workforce for 2 weeks.  But the non seasonally adjusted, here mapped out in colors, with the year in the x and the week in the y shows, shows - by scanning down the week 28 row since 1992 - that this auto refit is basically not occurring.   This is shown by the dark brown color versus all other boxes being lighter brown or white (I cap the data at 400,000 or lower which provides a more nuanced color gradient.

This shows a very healthy labor market as well as strong durable goods sales (autos), and increase in durable goods inventories (again autos).  This should add .2 to ,3 to 3rd Q GDP and shows momentum from 2nd Q GDP which suggests it may be a surprise on the upside and then readjusted upwards.  3rd Q GDP may very well top 3%.

 Continuing Claims, those who have started drawing state unemployment insurance and are continuing claims shows the continued very strong robust labor status, but the continuing claims is lagged by one week to the initial claims which are concurrent.  So next weeks continuing claims will be of interest to see if they match the above view on initial claims.

The above claims data coordinates well with the JOLTS data, but is completely out of whack with monthly employment data.  Since claims data is an all encompassing census and not a sample based survey like the monthly employment, it is reasonable to consider claims data as more useful and to not see useful accuracy in the monthly data.  This is why the BLS outlines that they will adjust and calibrate the monthly data to the accurate claims data, for whatever reason the BLS is not doing so in this business cycle while they have done so in every business cycle prior.

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