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Rise in Jobless Claims Fails to Deter Consumer Sector Firms


Aug. 7 2015, Updated 1:58 p.m. ET

Rise in jobless claims doesn’t deter the consumer sector

US labor market conditions have a direct bearing on the performance of the consumer sector (XLY) in the US (SPY). However, the recent rise in jobless claims failed to weigh down consumer sector growth in the US.

Consumer sector companies like Michael Kors (KORS), Molson Coors Brewing (TAP), and Coca-Cola (CCE) ended high on Thursday, August 6. Michael Kors rose 10.84%, Molson Coors Brewing rose 4.76%, and Coca-Cola rose 2.99%. So far, these stocks have yielded -41.72%, -1.02%, and 20.74%, respectively, this year. The consumer sector tracking Consumer Discretionary Select Sector SPDR ETF (XLY) has risen 8.58% this year.

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Investors in the consumer discretionary sector, like those invested in XLY, eagerly await the U.S. Department of Labor’s weekly jobless claims report. Initial jobless claims show the number of individuals who have filed for unemployment insurance for the first time. The U.S. Department of Labor’s Employment and Training Administration comes out with this weekly report. It’s a good indicator of labor market conditions in the US (SPY) (IVV). A fall in jobless claims bodes well for the labor market. It’s also good for the economy’s general well-being because it boosts consumer spending.

Jobless claims were at 270,000

For the week ending August 1, there were 270,000 new claims for unemployment insurance, according to a U.S. Department of Labor report. The report was released on Thursday, August 6. The figure came in above the consensus estimate of about 270,000 claims. It was also up from the previous week’s claim figure of 267,000.

In the US, applications for unemployment benefits rose by 3,000 for the week ending August 1. However, the four-week moving average for jobless claims fell by 6,500 to 268,250. This is a positive sign for the US labor market.

As a result, the rise in jobless claims failed to weigh down the consumer sector, as you can see in the above chart. Consumer comfort seemed to weaken for the week ending August 2. We’ll discuss this in the next part of the series.


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