Initial claims came in at 352K today, an increase of 4K over the prior week. Since bottoming out in the second week of March, claims have climbed 18K, or about 5.4 percent. Over the same horizon, claims have ranged from a low of 334K to a high of 388K during Easter week. Today’s claims figures are below the four week moving average of 361K, although this measure has been increasing since the third week of March. The four week moving average has increased from 341K in the third week of March to this week’s 361K.
On the continuing claims side, today’s figures came in at 3.068 million, representing a decline of 35K over last week. Continuing claims have generally been performing better than initial claims recently, although claims are up 100K from their bottom in the first week of March. On a four week moving average basis, continuing claims stand at 3.083 million, about 2.25K below the prior week.
What have we learned so far this year about the economy from the initial and continuing unemployment insurance claims?
The consensus view appears to be that the past month’s increase in initial claims is only a sign that economic conditions are weak, and nothing more. But, is the past month signaling an inflection point not only in equity markets, but with the labor market as well?
Interestingly (or perhaps not), only “fringe” economists and market observers appear to be concerned about a labor market inflection point, even with a prolonged market correction likely on the short-term horizon.
Instead of worrying about negative labor market growth, most observers are most concerned with a “growth” problem – which, simply put, is prolonged below trend growth.
The view that the recent figures have more to do with slower trend growth than with the cyclical trend, of course, has its dangers.
The readily apparent problem with this view is that once it becomes the consensus view that claims are starting to take on a cyclical nature, it’s too late, the market has already accounted for the likely movements.
Probably not surprisingly, this past month’s figures show acceleration in the probability of a labor market downturn with the coming year, but still short of the 50 percent mark. With that said, momentum is not in the improvement direction.