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Fall in Jobless Claims Might Benefit Department Stores

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Nov. 20 2020, Updated 2:27 p.m. ET

Jobless claims

The initial jobless claims for the week ending June 13 came in at 267,000 on a seasonally adjusted basis. The reported initial jobless claims were better than consensus economists’ estimate of 275,000. The data on jobless claims for the week ending June 13 was released on June 18 by the U.S. Department of Labor’s Employment and Training Administration.

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Improvement in job market

The jobless claims report indicates the number of individuals who have filed for state jobless claims for the first time. Jobless claims in the week ending June 13 fell by 12,000 compared to the prior week. This marks the 15th straight week that initial jobless claims were under the 300,000 mark. Recently, there has been considerable improvement in the US job market. In the previous week, jobless claims came in at 279,000.

The four-week moving average is a less volatile and a better measure of labor trends. It came in at 276,750. This indicates a fall of 2,000 from the previous week’s average of 278,750.

How department stores benefit

An improvement in the job market is favorable for the consumer discretionary sector (XLY) (FXD). Department stores like Macy’s (M), Nordstrom (JWN), Kohl’s (KSS), and J.C. Penney (JCP) sell items like apparel and accessories, footwear, and home furnishings. The items come under the consumer discretionary category. Improvement in the level of employment in the economy instills confidence in consumers about the state of the economy. This might translate into higher consumer spending at department stores.

Together, Macy’s and Nordstrom account for ~1.3% of the portfolio holdings of the First Trust Consumer Discretionary AlphaDEX Fund (FXD).

For more updates, visit our Department Stores page.

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