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Jobless Claims Rose in January

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Initial jobless claims rose by 8,000

According to the U.S. Department of Labor, initial jobless claims stood at 285,000 for the week ended January 30, 2016. This was a rise of 8,000 from the prior week’s downwardly revised level of 277,000. The reading was worse than the consensus estimate of 280,000.

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XLI, DIA fell on increase in jobless claims

Initial claims track new jobless filings for unemployment insurance benefits. With more Americans losing jobs and applying for unemployment compensation claims, the Industrial Select Sector SPDR ETF (XLI) and the SPDR Dow Jones Industrial Average ETF (DIA) fell 3.7% and 4.2%, respectively, over the past month as of February 4, 2016.

Even the broad-based Direxion Daily S&P 500 Bull 3X ETF (SPXL) and the SPDR S&P 500 ETF (SPY) fell 4.9% and 15.4%, respectively, over the same period.

With increasing claims, industrial stocks such as Caterpillar (CAT), Rockwell Automation (ROK), and Emerson Electric Company (EMR) fell 2.0%, 0.26%, and 2.0%, respectively, over the past month as of February 4.

Continuing claims fell by 18,000 for the week ending January 23

Along with initial jobless claims, continuing claims are released with a one-week time lag. While initial claims rose, continuing claims fell by 18,000 for the week ended January 23. Continuing claims fell to 2,255,000 compared to 2,273,000 in the previous week.

Manufacturers were cautious about hiring

US exporters are losing competitiveness in the global market due to the strengthening of the US dollar. The appreciating dollar leads to a rise in cheap imports and a fall in costly export orders. This impacts both domestic as well as export demand in the economy. In January, new export orders were lower. As a result, manufacturers were cautious about hiring employees.

A rise in jobless claims highlights the weakness surrounding employment conditions in the United States due to financial market volatility and China’s slowdown.

With the US dollar appreciating, let’s see how factory orders are managing.

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