Jobless claims: possibly the final “steady as she goes” report

 

 - by New Deal democrat

Let’s take our weekly look at jobless claims. These are a short leading labor market indicator. Also, it is likely that the firings in the federal labor force will shortly be reflected in this data.

This week initial claims rose 5,000 to 219,000, while the four week average declined -1,000 to 215,250. With the typical one week delay, continuing claims rose 24,000 to 1.869 million:

As usual, the YoY% changes are more important for forecasting purposes. So measured, initial claims were up 9.5%, the four week average up 1.4%, and continuing claims up 4.6%:

These are neutral readings, suggesting a slowly growing economy.

Finally, let’s look at what these suggest about the unemployment rate in the next several months. On a biweekly basis, both initial claims and the composite initial + continuing claims are higher by about 4%. Since the three month average of the unemployment rate one year ago was 3.8%, that suggests an unemployment rate trending to 4.0%:

Here is the absolute version of the same, using the initial + continuing composite:

This is another example of “steady as she goes.” But I suspect that the story might start to change significantly for the worse as early as next week, especially since the outlier low initial claims reading from January 25 will drop out of the four week average.