Jobless claims up 26,000 but 4-week average falls to lowest since August 2008
The number of US workers filing new applications for unemployment benefits rose 26,000 from last week’s outlier 407,000 number. Last week’s number was also revised higher to 410,000. Nevertheless, the trend in jobless claims is still down, with the 4-week average for jobless claims reaching 431,000, its lowest level since August 2008.
When looking at jobless claims, the year-on-year trend is noteworthy, as it is a good coincident-to-leading indicator of recession and tracks GDP growth quite well.
Right now, year-on-year initial claims are down 67,000 on an unadjusted basis and 61,000 on an adjusted basis. This is well off the cycle lows in April when unadjusted claims reached -183,000 and adjusted claims flirted with the –200,000 level – and suggests GDP growth will continue to moderate. However, the initial claims number in no way points to an imminent double dip.
The last time I reported on the claims numbers in early October, I wrote:
[J]obless claims point to continued job weakness. Nevertheless, the trend is not out of line with historical data, especially when looking at the last two recoveries. My last post on lending should add to the sense that the US economy is muddling through and will not double dip this quarter. What happens going into 2011 is much more dependent on the path of foreclosures and the potential for a housing double dip.
I would echo those sentiments here. When the recession began in December 2007, initial jobless claims were running at about a 340,000 clip. Now they are running at a 430,000 – 440,000 clip. So clearly, the labour market in the US may be improved, but it is still weak. Nevertheless, to the degree the US economy is threatened, it has more to do with the housing market or other exogenous shocks than with the labour market.