Thursday, May 16, 2024

Jobless claims still positive, still suggest at least a slight improvement in unemployment in coming months


 - by New Deal democrat

[Programming note: I’ll discuss housing permtis, starts, and units under construction later today. Preliminarily, this morning’s housing report may have been the most significant negative data of the entire year so far. Stay tuned.]

Initial jobless claims declined -10,000 last week back into its recent range, to 222,000. The four week moving average rose 2,500 to 217,500. With the usual one week delay, continuing claims rose 23,000 to 1.794 million:

This takes back some - but not all - of the caution raised by last week’s big jump, with the important caveat that there may be some unresolved seasonality at work, given the similar increase last summer that began in May.

The more important for forecasting purposes YoY figures, initial claims were down -1.3%. The four week average was down -0.2%, and continuing claims were up 4.9%:

Although the recent trend is tending towards the negative, as of now both initial claims comparisons remain positive for the economy. Continuing claims, while negative, with the exception of three weeks at the turn of the year have been in the range of 1.750-1.830 for the past ten months. Unless there is a significant change, continuing claims are boing to be much less of an issue in about eight weeks.

Two weeks into May, let’s update our Sahm Rule comparison as well. This year has averaged out to 227,000, which is exactly equal to last May’s average. This tells us that the YoY comparisons with the unemployment rate one year ago should improve in the next few months:

Since the unemployment rate last May was 3.7%, and the May-July average was 3.6%, I continue to expect the unemployment rate to improve slightly. Even using the less leading continuing claims metric, since the YoY comparisons are getting less negative, I would not expect any further incrrease in the unemployment rate at very least over the next few months.