LIVE MARKETS-Fresh labor numbers, stale factory data

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FRESH LABOR NUMBERS, STALE FACTORY DATA

On Thursday investors were treated to fresh labor market data with a stale chaser of manufacturing numbers from September.

Last week, 191,000 U.S. workers joined the queue outside the unemployment office USJOB=ECI marking a 12.4% weekly drop, or 29,000 fewer than analysts expected.

Ironing out weekly volatility, the four-week moving average of initial claims now has a clear downward bias, sitting comfortably within the range associated with healthy labor market churn.

At any rate, it would appear that the recent spate of corporate layoff announcements is a no-show in the claims data thus far.

On that subject, outplacement firm Challenger, Gray & Christmas (CGC) USCHAL=ECI reports U.S. firms announced 71,321 layoffs in November. While the number is down 53% from October, it's up 24% from November 2024. It's the highest November reading in three years.

Year-to-date, companies have said they'd cut 1,170,821 jobs, a 54% increase from the same period last year.

“Layoff plans fell last month, certainly a positive sign," writes Andrew Challenger, senior vice president at CGC. "That said, job cuts in November have risen above 70,000 only twice since 2008: in 2022 and in 2008."

The telecom, technology, food and services sectors announced the most job cuts last month, but the DOGE-related firing spree remains the leading reason for layoffs so far this year, responsible for 293,753 job cuts, or 25.1% of the total.

So far this year, the five most prolific job-cutters by sector are government, technology, warehousing, retail and services.

With much official labor market data still MIA as a result of the six-week government shutdown, how do investors - and the Fed - gauge the extent to which these layoffs are affecting unemployment?

"Unemployment likely is rising despite the stagnation of continuing claims in the second half of this year," says Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics. "In addition, the rise in longer-term unemployment this year, which has accounted for about half of the total increase, is not showing up in continuing claims, as most people lose eligibility for benefits after claiming for 26 weeks."

Continuing jobless claims USJOBN=ECI reported on a one-week lag, unexpectedly edged 0.2% lower to 1.939 million, or 22,000 shy of consensus. Even so, ongoing claims remain elevated, supporting consumer survey data that suggests laid-off workers are finding it increasingly difficult to find a replacement gig.

Continuing claims "remain at a level consistent with the weak hiring rate that characterizes the current labor market," writes Nancy Vanden Houten, lead economist at Oxford Economics.

In separate - and significantly staler - news, new orders for U.S. factory-made merchandise USFORD=ECI increased by 0.2% in the long-ago month of September. The print was weaker than the 0.5% growth economists predicted, and shows a sharp deceleration from August's robust 1.3% growth.

Delving below the headline, the defense aircraft category is the eye-grabber, jumping 30.9%, while commercial aircraft orders dropped 6.1%. Machinery orders were unchanged and orders for durable goods stood pat at the originally stated 0.5%

Orders for commercial and defense aircraft jumped by 21.8% and 48.4%, while the broader transportation segment rose by 7.9%.

As the graphic below shows, factory orders have largely leveled off to a flat, range-bound trendline of around $600 billion since mid-2022. This coincides with ISM manufacturing PMI, which has remained fairly consistently in contraction territory over the same time frame.

(Stephen Culp)

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