- by New Deal democrat
Last week I suggested that there might have been a break in the trend of higher YoY jobless claims, but there was not enough evidence yet. It is fair to say that this week’s report supplied that evidence.
Initial claims declilned another -4,000 to 217,000, the lowest weekly number since mid-April. The four week average declined -5,000 to 214,500, also the lowest such number since mid-April. Contrarily, with the typical one week delay continuing claims rose 4,000 to 1.955 million, close to its 3.5 year high set four week ago:
On the more important for forecasting YoY basis, initial claims were down -8.1%, and the four week average down -4.1%. Only continuing claims were higher, by 5.5%:
Initial claims are squarely in the middle of their range over the past 3.5 years, suggesting that very few people are getting laid off. Indeed, as a percentage of the labor force, so far this month the average is only about 0.13% of the labor force has been laid off, among the lowest proportions since initial claims were first reported 60 years ago (not shown). The only soft spot is that those who have been laid off are finding it more difficult to find new employment.
This is very strong evidence of a break in the weaker trend that began last September. I have no thesis as to why, beyond speculation that it may have to do with employers in some sectors wary of losing their employees who may be of dubious legal immigration status.
Finally, here is the comparison with the unemployment rate:
With total claims now running roughly even to last year’s level, this suggests that the unemployment rate, which was 4.2% one year ago as well as last month, is likely to stay very close to that level as well.
