- by New Deal democrat
Later this morning I’ll discuss yesterday’s positive durable goods orders release, and in that context I’ll also have more to say about the likely reason why industrial production also improved so much. Tomorrow we’ll get personal income and spending, and new home sales, both from December, as well as the first pass at Q4 GDP — all of which are one month late - even now three months after the end of the government shutdown!
In the meantime let’s take our usual weekly look at jobless claims. I do this because they are a good short leading indicator, particularly of the labor market.
Initial claims declined sharply last week, down -23,000 to 206,000, the best reading since mid-January. The four week moving average declined -1,000 to 219,000. And with the typical one week delay, continuing claims rose 17,000 to 1.869 million:
As per my usual practice recently, the above graph includes the last three years to show that there has been a pattern of unresolved seasonality whereby claims rise in the first six months of the year, and then decline in the last six months.
Now let’s look at the YoY% changes which are more important for forecasting pursposes:
Initial claims were down -8.0%, but the four week moving average was still higher by 0.6%. Continuing claims were also higher by 0.4%.
So was the big decline this week a return to the positive comparisons YoY that we saw beginning last July? Or was it simply a function of Presidents’ Day being one week earlier this year than last year? Notably, in 2023 and 2024 there was a big spike downward in claims during the equivalent week in February, and while there was no such spike last year, there was a big upward spike the following week.
All of which means we’ll have to wait one more week to see if this week’s initial claims number was an outlier or not. Another week of lower claims YoY suggests that the trend since last July of comparatively very low claims has not abated, while a spike upward would suggest that unresolved post-pandemic seasonality has resumed being the bigger driver of the trends.
In either event, for forecasting purposes the numbers remain either mildly or strongly positive.
