Employment Indicator

CAMS Weekly View from the Corner – Week ending 11/27/2020

November 30, 2020

With the previous week being a holiday shortened session we thought we would step off our 2020 theme of utter focus on market trading and behaviors to take a quick look at the general employment landscape.
 
There are numerous ways to gauge the employment landscape.  A tip of the spear measure though is the Weekly Unemployment Insurance Claims.
 
These Claim numbers are released each Thursday morning which gives us a continuous update on the general landscape.
 
Taken further, Initial Unemployment Claims offer an excellent measure for the general feel of the employment backdrop being employers can ill-afford to have their staffing filled when there is little work for them to participate in.
 
Obviously this year muddies that historical truth with a number of government programs offered to employers to retain employees.  In part, this is why we have steered clear of general economic numbers this year in light of the various tributaries every one of them offers. 
 
To present them accurately in 2020 would have required a decent amount of qualifiers and footnotes that would have far surpassed our intended “short read” objective for these Weekly Views.
 
Now deep into 2020 the Weekly Initial Claims are a bit more straightforward.

Click For Larger View: https://www.dol.gov/ui/data.pdf

The above depiction comes from the Department of Labor’s Unemployment Insurance Weekly Claims Report.  The above chart covers the previous twelve months.
 
The dashed line represents the weekly number of new Claimants on a Seasonally Adjusted basis.  The continuous line is a four week moving average of new Claimants.
 
We can see there has been significant improvement in the employment landscape as the dashed line has dropped from a peak of 7 million Initial Claimants per week to our most recent figure reflecting 778,000.
 
Our current figure still represents nearly three times the levels we were experiencing in early 2020.  At this stage, being these are Initial Unemployment Claims, we are watching closely to see if these can continue to hold steady and preferably continue to trend downward rather than resuming an upward trend.
 
If an upward trend begins again in earnest it may be a tall order to think various markets will remain calm and structurally solid as they have in recent weeks and even months.
 
Speaking of markets, they continue to offer just that – a structural soundness and an overall healthiness – which in part seems is built upon a continued expectation of society continuing to open up and repair.
 
Absent any new government policies incentivizing employers to retain their employees – beyond economic viability to do so – these Weekly Initial Unemployment Claim levels will assist us in gauging whether the employment market is continuing to heal.

I wish you well…

Ken Reinhart

Director, Market Research & Portfolio Analysis

Footnote:

H&UP’s is a quick summation of a rating system for SPX9 (abbreviation encompassing 9 Sectors of the S&P 500 with 107 sub-groups within those 9 sectors) that quickly references the percentage that is deemed healthy and higher (H&UP).  This comes from the proprietary “V-NN” ranking system that is composed of 4 ratings which are “V-H-N-or NN”.  A “V” or an “H” is a positive or constructive rank for said sector or sub-group within the sectors.

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