Jobless claims, such as JOLTS, correspond to a softening within a strong labor market

by a New Deal Democrat

Initial jobless claims rose by 21,000 last week to 211,000, still a very small number, even if it was the highest since early January. The 4-week average rose 4,000 to 197,000, also still an excellent level. Continuing claims, one week late, rose 69,000 to 1.718 million, the highest level since January 2022:

Just like yesterday’s JOLTS report, the ongoing claims tell us that the labor market, while still objectively very strong, has softened compared to last year.

Year-on-year changes also show relative softness, with continuing claims up 3.2%, initial claims up 6.6%, but the all-important 4-week average up just 0.1%:

For the initial claims to warrant even a recession warning yellow flag, the 4-week average would have to rise 10% year-over-year. Needless to say, we are nowhere near that marker.

Finally, initial claims are a leading indicator of the unemployment rate, usually with a lag of several months. Here’s what the last 16 months look like:

Overall, the jobless rate in tomorrow’s jobs report should be within 0.1% of unchanged and slightly more likely to rise than fall given the slowdown compared to the increase in jobless claims in November and December.

I expect tomorrow’s report to revert to the general slowing trend we’ve seen over the past year, as unlike January in February seasonally the data “expects” some hiring versus massive layoffs like in January. I will focus specifically on whether there are weaknesses in the leading temporary help, manufacturing and housing sectors. We’ll see then.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *