Unemployment Claims (First Time Claims) Surge -- November 26, 2014; First Time Since September That Claims Broke The 300,000 Threshold; Four-Week Average Also Rises -- AP

Updates

Later, 10:02 a.m. CT: I find this interesting. I truly thought the 313,000 number was quite incredible (especially considering all the data points below, and the miss by analysts by 26,000 -- that's a huge, huge miss). But yet, Reuters/Bloomberg were so sanguine (is that the right word?). I was wondering. But then I saw this: Matt Drudge was also surprised; he put the link in red with the headling saying that the number was above 300,000. Whew! I feel better that I wasn't misreading the story.
 

Original Post

313,000.


Reuters: their report.
Bloomberg: their report.

First time jobless claims surge by 21,000.  Last week's report was revised upward by 1,000 to 292,000.

Yes, Virginia, this report is horrendous. Let me count the ways.

First, back on November 13, 2014, just a couple of weeks ago, when the increase was big, but not as big as this past week, Reuters called it simply a "pause" (applications surge 12,000 to 290,000). We'll look at the Reuters spin for this week's data later. (Spoiler alert: Reuters did not say this was a "pause." They just said everything was, and I'm paraphrasing here, "okey-dokey."

Second, Reuters says there was nothing "special" to explain this surge. That's scary, when a surge like this cannot be explained away.

Third, analysts had actually expected the number to drop to 288,000 from 293,000 (a drop of 5,000). So instead of dropping 5,000, the number rose 21,000, or 26,000 worse than expected. Back on May 22, 2014, the number surged 28,000; that's how far back I had to go to find a comparable surge.

Fourth, this is just before the holidays (but not yet the holiday season). Not only is this an emotional hit that unemployment claims are surging just before the holidays, but it's not good news for a number of reason.

Fifth, this is just before the holidays (but not yet the holiday season)when retailers have been scrambling to hire folks for seasonal jobs. One can only imagine the number had retailers been laying off folks.

Sixth, this is just after President Obama invited up to 5 million more undocumented workers to stay in the US "permanently." Well, for at least three years with no threat of deportation. And, yes, they will collect benefits, at least according to a headline I surfed through (without reading the story; I can only take so much depressing news in any given day).

Now, back to the spin.

Reuters:

• the four-week average dropped again, for the 11th straight week, a sign that the jobs market was improving. In fact, the average continued to drop due to the anomalous fall in applications on October 16, 2014, which was never explained, and didn't fit the expectations
• the number of people still receiving benefits fell to 2.32 million, the lowest since December, 2000. What Reuters never mentions: the 99-week extended benefits ended late last year. Of course, the continuing benefits number should decrease from this simple fact alone; if it increases, watch out.
• the numbers suggest the next monthly unemployment report could show a six-year low of 5.8%

Bloomberg:

• to their credit, they got the headline correct -- claims increase to almost a three-month high
• to their credit, in the first paragraph: "a possible sign the pace of improvement in the labor market has cooled"
• fair and balanced? "It would take several weeks of sustained elevated readings to confirm the labor market has taken a step back." 
• one analyst says it's hard to forecast the claims number during the holiday season (which, of course, has not yet happened) but Bloomberg did not say how badly the forecast was -- the analysts expected a decrease of 5,000; when in fact, the huge surge

For the record, the four-week average: not said in either article; Reuters simply mentioned it was below 300,000. 

 Other economic data was released in the same report. Consumer spending kept pace with income (which isn't saying much). This was key: the stock market, which had been in the green, went negative after the report.

Later, 9:51 a.m. CT, November 26, 2014: I found this most recent surge so interesting that when I saw the AP headline, I decided to see how the AP handled it:

• the highest level since the first week of September 
• the four-week average, a less volatile measure, rose 6,250 to 294,000

How interesting. I was led to believe by Reuters/Bloomberg that the four-week average actually decreased; either I misread their articles (they were not explicit about the number) or I was misled (which happens a lot; I don't spend a lot of time on any of these things). 

I was actually surprised when I thought Reuters/Bloomberg said the four-week average actually decreased. I thought that was highly unlikely due to last week's surge. I did not correct the original blog above, just left it as written. I did add this to the subject line.