Economy

Economic Data Roundup (05/05/2016)

5/5/16 12:00 PM

iStock_000009946822_Small.jpgThere were two important reports on the U.S. economy released this morning. First, data from Challenger, Gray & Christmas showed that the number of announced job cuts in America jumped by 35 percent to 65,141 in April. That is the first monthly uptick in planned layoffs since January and 5.8 percent above the April 2015 pace of job cuts. Year-to-date, businesses have announced 250,061 layoffs, a 24 percent increase compared to the first four months of 2015, and the highest January-April total since 2009 when the economy was still in a recession. Much of the uptick in planned job cuts is due to the energy sector because even though oil has rebounded significantly in recent months, the price per barrel is still low enough to continue to drive down profits for firms in this arena. Altogether, employers in the energy sector announced 19,759 job cuts in April, bringing the 2016-to-date total to 72,660, up 26 percent compared to this same period last year. Planned layoffs have also spiked among computer firms lately, with 34,017 job cuts being announced so far in 2016 by these businesses, up more than 260 percent compared to the first four months of 2015. However, John A. Challenger, chief executive officer of Challenger, Gray & Christmas, stressed that “It is not unusual to see heavy job cuts a strong economy. In December 1998, near the height of the dot.com boom, we recorded more than 103,000 planned workforce reductions. The fact is, companies are constantly retooling, and sometimes the best time to do that is when the economy is strong.”

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Somewhat related is a report from the U.S. Department of Labor which showed that seasonally adjusted initial jobless claims totaled 274K in the week ending April 30, an increase of 17K from the prior week’s figure, much worse than expected, and the biggest sequential gain since January 2015. This weak print is not too surprising since several incoming reports suggest that labor market conditions generally softened in April. However, this is still the 61st consecutive weekly initial claims reading below 300K, a string that is even better than what was seen during the late ‘90s economic expansion which had a smaller overall labor force. Gennadiy Goldberg, a U.S. strategist at TD Securities, added that “If [claims] trend higher for a few weeks, then we start to worry, but we’ve been steadily lower. The U.S. economy may not be growing at 3 percent, but we’re continuing to muddle along, and that’s still creating a demand for labor.”

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Sources: Econoday, Twitter, Bloomberg, Challenger, Gray & Christmas, ZH, U.S. DoL, FRBSL

Post author: Charles Couch