The SPDR S&P 500 ETF Trust SPY traded lower Thursday after the weekly U.S. jobs report from the Labor Department revealed a surprise increase in the number of initial jobless claims.
On Thursday morning, the Labor Department reported 870,000 initial jobless claims for the week ending Sept. 19. That number was slightly worse than the 860,000 claims in the previous week and the 850,000 claims economists were expecting.
Several economists and analysts have weighed in on what the disappointing report means for investors and the economy.
Recovery Losing Steam: Joseph Brusuelas, Chief Economist at RSM US LLP, said the jobs number is yet another signal the easy part of the economic recovery is already in the rear-view mirror.
“One gets the sense that the reality of an economy operating at 80% capacity has finally sunk in, and pricing action across asset classes over the past month tends to bear that out,” Brusuelas wrote.
Moody’s Analytics economist Ryan Sweet said incremental hiring will be more difficult to come by from this point forward.
“This next leg of the recovery is going to be much more driven by the underlying strength of the economy rather than businesses just recalling workers,” Sweet said.
More Stimulus Needed? Mike Loewengart, managing director for investment strategy at E-Trade Financial Corp, said it’s good news that weekly jobless claims have come in under the one million mark for four consecutive weeks, but it seems clear the labor market is starting to stagnate.
“Further, a shaky labor market translates into a skittish consumer, and in the face of a pandemic that seemingly won’t go away without a vaccine, the outlook for the economy certainly comes into question,” Loewengart said.
Ian Shepherdson, chief economist with Pantheon Macroeconomics, said investors shouldn’t expect consumer spending to continue to rise now that enhanced unemployment benefits have expired.
"Against this backdrop, the need for further fiscal action is obvious, but we no longer expect any meaningful relief bill until February,” Shepherdson said.
Benzinga’s Take: The weekly rise in jobless claims makes next Thursday’s report even more critical. If This week’s report was simply an outlier, it’s nothing more than noise. However, if it's a sign that the economic recovery has stalled, it could apply more pressure on Washington to provide additional stimulus.
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