As you may recall from last week, I am starting to monitor initial jobless claims to see if there are any signs of stress.
My two thresholds are:
1. If the four week average on claims is more than 10% above its expansion low.
2. If the YoY% change in the monthly average turns higher.
Let’s take a look through today, and also see how that might play out in tomorrow’ jobs report.
First, the four week average is only 7.5% above its recent low:
Second, the YoY% change in the monthly average is still lower by about -2.5%:
Finally, since initial claims tend to slightly lead the unemployment rate, here’s a look at the YoY% change in the four week average (blue) compared with the YoY change in the unemployment rate (red):
Since initial claims have still been generally trending lower - at least slightly - YoY, I am anticipating that the unemployment rate will remain slightly lower than last May’s reading of 3.8%. I suspect it will tick up from 3.6% to 3.7%. In any event, we’ll find out tomorrow morning.