Almost every day a major government agency or private organization releases new information covering the status of some pocket of the economy. I’m here to help you sift through the barrage of economic data out there and determine what this will mean for your stocks.
Unfortunately, this week we’re a bit light on data because of the government shutdown. So we didn’t receive the report on Construction Spending or Factor Goods Orders from the Commerce Department, as well as the Unemployment Rate Report from the Labor Department.
So we have just one major economic report out there this week, and it was actually pretty solid:
Our Sole Major Economic Report: Jobless Claims
What It Measures: It is an indicator of the direction of the job market. Increases in jobless claims show slowing job growth; decreases in claims signal accelerating job growth. On a week-to-week basis, jobless claims are volatile, so one of the best ways to track this measure is to look at the four-week moving average. It usually takes a jump or decline of at least 30K claims to signal a meaningful change in job growth.
The Breakdown: Last week, jobless claims climbed just 1,000 to 308,000. Given that economists had forecast a rate of 315,000, this was better-than-expected. Meanwhile, the four-week moving average dropped to 305,000 last week, the lowest level since May 2007.
The Bottom Line: This was a good report and a sign of continued improvement in the labor market. In addition, figures released by the ADP Research Institute showed private employers added 166,000 workers in September following a revised 159,000 rise in August.
Of course, it’s still not certain how the government shutdown and potential layoffs from government contractors will affect next week’s numbers. All in all, we’re showing steady improvement here, but we still have a ways to go before we get close to the Fed’s mandate of unemployment at 6.5%.
All told, the market remains nervous over the government shutdown, but in general Wall Street is increasingly looking forward to what actually matters–earnings. So read through my post yesterday on Buzz Words You Should Know for Earnings Season for a refresher on reading through financial statements, and I’ll be in touch next week as we hopefully start to see some compromise between our two political parties over the weekend.