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ON THE VERGE: JOBLESS CLAIMS, LAYOFFS, TRADE BALANCE

Thursday data was concentrated on the labor market and international trade, two areas of the economy that are likely to undergo some transformation as a whirlwind of policies from the Trump 2.0 administration make themselves felt.

Last week, 221,000 U.S. workers filled out fresh applications for unemployment benefits USJOB=ECI, 8.7% fewer than the previous week and undershooting consensus by 14,000.

But what about the mass firings at the Federal level?

Federal workers fired at the hands of billionaire Elon Musk and his DOGE brigade, do not show up in jobless claims data; instead, they are reported through the Unemployment Compensation for Federal Employees (UCFE) program, which reports on a one-week delay.

Ongoing claims USJOBN=ECI, also reported on a one-week lag, surged 2.3% to 1.897 million, topping the 1.880 million analysts expected. Elevated continuing claims support recent consumer survey data suggesting laid off workers are finding it increasingly difficult to find a replacement gig.

"The jobless claims data continue to be consistent with a labor market characterized by few private-sector layoffs but limited employment opportunities for those who are unemployed," writes Nancy Vanden Houten, lead U.S. economist at Oxford Economics.

Speaking of pink slips, a separate report from executive outplacement firm Challenger Gray & Christmas $(CGC.AU)$ USCHAL=ECI showed last month corporate America announced it would lay off 172,017 workers, a 245.5% monthly increase.

It marks the worst February since 2009, the nadir of the Great Recession and the highest monthly tally since July 2020.

The number is also 103.2% higher than February 2024.

Firings of Federal Government employees at the hands of the DOGE brigade were largely responsible for the surge, with 62,242 job cuts from 17 different agencies.

The retail sector took the dubious second place prize, letting 38,956 workers go. With 22,042 layoffs announced, the technology sector came in third.

"Private companies announced plans to shed thousands of jobs last month, particularly in Retail and Technology," says Andrew Challenger, CGC's workplace expert. "With the impact of the Department of Government Efficiency DOGE actions, as well as canceled Government contracts, fear of trade wars, and bankruptcies, job cuts soared in February."

One last bit of labor market data; the Labor Department revised its fourth-quarter labor cost USLCA=ECI and productivity USPROR=ECI growth data, slashing the former to 2.2% from 3.0% and raising the latter to 1.5% from 1.2% (both a quarterly annualized rates).

That's good news.

"The twin concerns of a slowing labor market and slower economy and higher or sticky inflation have both been addressed in a positive way with productivity picking up and labor cost pressure cooling down," writes Chris Zaccarelli, chief investment officer at Northlight Asset Management.

All of this is prologue to the February employment report, due Friday morning. Economists polled by Reuters expect it to show the U.S. economy added 160,000 jobs last month, leaving the unemployment rate unchanged at 4.0%.

Lastly, outside the labor market sphere, the trade gap USTBAL=ECI, or the difference in the value of goods and services imported to the U.S. and those exported abroad, widened in January by 33.9% to %131.4 billion, a record high.

Under the hood, a 1.2% increase in exports was handily overshadowed by a 10.0% surge in imports, which account for the lion's share of the United States' total international trade.

The data, of course, does not reflect the implementation of Trump's trade war-provoking tariffs against three of its largest trading partners, Canada, China and Mexico.

But it could reflect tariff anticipation.

"The market theory is that the jump in import volumes may reflect companies' efforts to accelerate imports to beat Trump tariff threats," writes Carl Weinberg, chief economist at High Frequency Economics. "If we get a snapback in imports in the February and March numbers, then we will know that this idea of a beat-the-tariff distortion in imports is on the mark."

So let this graphic, showing the value of goods and services imported by each of those countries, serve as a "before" snapshot:

(Stephen Culp)

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FOR THURSDAY'S EARLIER LIVE MARKETS POSTS:

U.S. STOCKS TAKE IT ON THE CHIN IN EARLY TRADE - CLICK HERE

NASDAQ COMPOSITE: IS THERE AN OFF RAMP ON THE CORRECTION HIGHWAY? - CLICK HERE

RECESSION THREATS RISING- MERCER - CLICK HERE

GERMANY'S FISCAL OVERHAUL COULD BUFFER EUROZONE IF US TARIFFS MATERIALISE - UBS - CLICK HERE

LUXURY: ARE WE OUT OF THE WOODS? - CLICK HERE

STOXX SLIPS DESPITE MODERATING TARIFF FEARS AND POSITIVE EARNINGS - CLICK HERE

EUROPE BEFORE THE BELL: FUTURES UP AS TARIFF TENSIONS EASE - CLICK HERE

ECB'S LAST EASY DECISION - CLICK HERE