Due to today’ official Day of Mourning for the late President Jimmy Carter, initial and continuing claims were released yesterday, but since I didn’t cover it then, let’s catch up now on the normal day.It is important to note right off the bat that the two weeks after Christmas and New Year’s are those most affected by seasonality, and are extremely difficult to adjust for. So the numbers need to be taken with liberal helpings of salt. In particular, for the last two years the pattern has been steep declines to annual lows those two weeks, followed by an increasing trend – probably also a leftover from the distortions of the pandemic years.That being said, initial claims declined another -10,000 to 201,000, their lowest number since last February. Similarly, the four week moving average declined -10,250 to 213,000, their lowest print since April. Continuing claims, with the usual one week delay, rose 37,000 to 1.867 million, in line with their numbers for the past several months:
Given the outsized effect of seasonality this week, the YoY% changes are all the more informative. On that basis, initial claims were up 1.5%, the four week moving average up 4.4%, and continuing claims were up 6.1%:
These are all neutral readings, telling us the economy continues to expand, but at a much more attenuated pace than even earlier 2024.Finally, here is our final look at what jobless claims are forecasting for the unemployment rate:
Absent the strong effects of the surge in new immigrants post-COVID, claims continue to suggest downward pressure on the unemployment rate. Indeed, the Household Survey does break out the unemployment rate by native born (dark blue in the graph below) vs. foreign born (light blue), and you can see that the significant increase in the latter has been primarily responsible for the outsized increase in the unemployment rate:
If we compare initial claims with just the native born unemployment rate, the figures track much more closely, with the exception of last January and February:
In any event, on a monthly basis, initial claims were roughly 7% higher YoY, and continuing claims up 3.5%. Since one year ago the unemployment rate was 3.7%, a 3.5% to 7% increase in that rate (as usual, note that we are calculating a percent of a percent) brings us up to 3.8%-4.0%, which is lower than the 4.2% we saw last month – but right in line with the native born unemployment rate of 3.9%. We’ll find out tomorrow!More By This Author:Truck Sales Sound A Warning November JOLTS Report Adds To The Data Showing Continued Labor Market Deterioration Economically Weighted ISM Indexes For December Forecast Continued Expansion
