Ahead of Unemployment

The latest figures from the US economy are not supportive of improving conditions in the labor market as data points continue to miss estimates.  The downturn in employment has been steadily accelerating as evidenced by the latest initial jobless claims and challenger job cut reports.  Initial jobless claims are now firmly back above 300,000 with the latest number coming in at 320,000.  Challenger reports that layoffs have increased by approximately 20% year over year as 40% of announced job cuts in 2015 have come from the energy sector which is rapidly paring jobs amid the slump in prices.  Disappointing factory orders data is adding to economic woes after contracting for 6-straight months.  Nevertheless, equities remain elevated, anticipating today’s nonfarm payrolls.

Rising nonperforming loans at Chinese banks along with tightened lending standards and difficult liquidity conditions highlight just a few of the problems facing China’s ambitious 2015 growth targets.  Real growth has slowed to approximately 3% according to some analysts as capital flight out of China accelerates.  Aside from dropping foreign direct investment and capital outflows, slowing employment growth and relentless price deflation are hampering efforts to accomplish the objectives as the Central Planners try and shift the orientation from a strictly export economy to a balanced consumption-based platform.  Global economic headwinds are not helping these efforts with further easing measures from the People’s Bank of China expected in coming months.