- by New Deal democrat
After several months of snoozing at almost identical weekly levels, initial jobless claims awoke with a bit of a jolt this week, increasing by 22,000 to 231,000, the highest weekly number since last August. The four week average unsurprisingly also rose, by 4,750, to 215,000. With the usual one week delay, continuing claims rose 17,000 to 1.785 million, still one of the lowest readings since last August:
As usual, the YoY% figures are more important for forecasting purposes. The weekly number was higher for the first time in six weeks, by 2.7%. The four week average is still lower by -1.4%. Continuing claims remain higher, by 4.6%, but are still close to their lowest YoY reading in over a year:
Now that we have all of the jobless claims data for April, here’s what the monthly numbers (right scale) look like compared with the unemployment rate (left scale):
To reiterate, we have 60 years of evidence that initial jobless claims in particular lead the unemployment rate. Continuing claims do also with a much shorter lead time, and sometimes they are coincident. With initial and continuing claims close to unchanged YoY, the unemployment rate should move in that direction as well. Now that the last 3.4% reading of the unemployment rate is out of the picture, and there is only one 3.5% reading left (for July), I continue to expect that the unemployment rate is more likely to decline towards 3.7% than any other direction. As to last week’s renewed 3.9% rate, Paul Krugman has helpfully noted that it was primarily a rounding issue, as one digit further out it rose from 3.83% to 3.87%. In any event, initial claims continue to indicate that the “Sahm Rule” is not going to be triggered in the near future.
A quick scan of this week’s release does not indicate any special issues in any State. Because last year seasonally adjusted claims rose throughout May and remained high during the summer, it is possible there is a residual post-pandemic seasonal adjustment issue. We’ll have to watch and see if this is just a one-off anomaly or the beginning of a longer change of trend.
