Thursday, October 26, 2023

Jobless claims continue near expansion lows


 - by New Deal democrat

Jobless claims continued very low last week, justifying taking down the “yellow caution flag” that had been in place for a number of months.

Specifically, weekly new claims rose 10,000 to 210,000 - still a very low historical number. The more important four week moving average increased 1,250 to 207,500. Contrarilyk with a one week lag, continuing claims rose sharply, up 63,000 to 1.790 million, their highest level since spring, and before that, the highest level in 18 months:

On the YoY basis which is more important for forecasting, initial claims were up 4.5%, the four week average up 3.4%, and very much conversely, continuing claims up 28.7%:

Basically, there are very few new layoffs, but those previously laid off are having a *relatively* harder time finding new employment, although by historical standards this too is very low. As you may recall, in September I wondered whether we were dealing with unresolved seasonality. This is only one week of an increase in claims. If we are seeing a delayed such effect, then claims should continue to rise over the next few weeks. We’ll see.

Finally, since initial claims lead the unemployment rate by several months, so far in October initial claims are only up 2.8% YoY. Since one year ago the unemployment rate, averaged over 3 months, was 3.6%, this suggests that in a few months it will stabilize at roughly 3.7% (3.6*1.028=3.7%):

 Needless to say, this comes nowhere close to triggering the “Sahm Rule” for nowcasting recessions.