The Department of Labor announced that initial jobless claims for the week ended June 19 came in at 457,000, which was slightly below expectations of 463,000, but down 19,000 from June 12 and down 156,000 from a year ago. The four-week moving average, which smoothes out the week-to-week volatility, was 462,750, down 1,500 from June 12.
The Good: Initial claims are moving in the right direction (down) albeit at a snail’s pace. Continuing claims are also moving in the right direction. For the week ended June 12, continuing claims were 4.55 million, down 45,000 and in-line with expectations.
The Bad: At this stage in the economic cycle, most would expect to see this number much lower. For the week ended June 5, emergency and extended benefits rose 45,000 to 5.3 million. Note: extended benefits are for those whose traditional unemployment benefits have expired.
The Ugly: The government census hiring had a positive, but temporary, impact on the claims data. In addition, Mississippi, Louisiana, and Alabama were among those states with the largest decreases in initial claims. However, economic conditions for the states along the Gulf of Mexico are worsening because of the oil heading to the shores of the Gulf states. At this point, the negative impact of the oil disaster has yet to be reflected in the initial claims report.
While not an awful report, it doesn’t inspire much confidence. There are still too many Americans out of work. Until we see an improvement in employment, it will be tough sledding for consumer-related stocks like Best Buy (BBY), JC Penney (JCP) or California Pizza Kitchen (CPKI).
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Read the full analyst report on “CPKI”
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