New jobless claims end 2022 on a positive note;  preview of tomorrow's jobs report

– by a New Deal Democrat

Initial claims started the year — or ended last year, if you’re tech-savvy — on a positive note, falling 19,000 to a 3-month low of 204,000. The more important 4-week moving average was down 6,750 to 213,750. two-month low. Continuing claims for the previous week also fell by 24,000 to 1,694,000 (due to software or human input error, FRED recorded the entries as December 31, 2023! Which leaves a one-year gap, so I’ve omitted this week’s data from the chart. More down):

All three numbers also remained lower year-over-year. The most important leading indicator, the year-over-year change in the 4-week moving average of new claims, is 3.2% below its level a year ago (this week’s data is omitted from the chart below due to the same issue ):

Although seasonal distortions may be at their maximum right now, this is a very good weekly report.

Tomorrow we get the much more important monthly jobs report. As initial claims drive the unemployment rate and have remained low, I expect the unemployment rate to remain unchanged +/-0.1%. As for wages themselves, I expect the quarterly average of 272,000 to continue to slowly decline, suggesting a monthly number below 250,000. Since taxes withheld were negative year-over-year for the second month in a row in December, I’ll be especially alert for a deviation compared to recent reports.

I will also look to see if there is a deterioration in some leading employment indicators that have not yet changed; in particular employment in construction and manufacturing. As the weekly headcount also weakened over the past month, I will also be watching to see if temporary employment continues to decline.

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