Jobless claims in holding pattern

No change. That’s what we see from this week’s jobless claims numbers. The 4-week average number is up 145,750 from a year ago. That’s a bonus because three weeks ago this number was 166,500 and has fallen for three weeks on the trot. However, the continuing claims numbers keep rising in relation to last year — the 4-week average now up 1.15 million from this time a year ago.

All in all the claims number didn’t tell us anything. We are in a holding pattern until the unemployment figure comes out next week.

Update 718PM ET: Terry from Washington D.C. added his comments below stating that he did not think claims showed a holding pattern at all and proceeded to quote figures as to why, rating the post one out of five (thanks, wise-guy).

However, I reckon he is a lot closer to my point of view than he realizes. The data support my previous commentary that the employment market is weak and getting worse – both for seasonally adjusted jobless clams and and non-seasonally adjusted claims. Because the data are not clear as to how much worse things are getting, we are essentially in a holding pattern until we get more confirmation.

Those of you who have been reading my blog for some time know that I am not bullish on the U.S labour market. Witness my last three posts on the unemployment claims numbers: Jobless claims up for the week, Jobless claims down for the second week, and Unemployment claims finally fall, outlook still grim.

Last week I said

Continuing claims confirm the weakness of the overall data with the four-week average coming in at 3,680,000 up 1,131,500 from last year — the highest of this business cycle.

Again, when we see consistent and large decreases in these year-on-year comparisons, we will know that the employment outlook is starting to improve. However, we have not reached that point.

Then two weeks ago, my comments were similar:

While the one-week number of 461,000 is positive and reflects a decrease in hurricane-related jobless claims, the year-on-year figure is consistent with recession.

Continuing claims confirm the weakness of the overall data. Continuing jobless claims for last week were 3,711,000, bringing the four-week average to 3,632,000 up 1,080,250 from last year.

When we start seeing a consistent and large decrease in these year-on-year comparisons, we will know that the employment outlook is starting to improve. However, we have not reached that point. Comparisons are still bleak.

And three weeks ago, it was the same:

A more meaningful recession indicator is change in initial claim’s four-week average. The change tells us how much softer the economy is getting and the four-week average smooths out aberrations from week to week. In the past, when this number has reached 50,00 or more, the economy has always gone into or already been in recession. The four-week average is 482,500, up 165,500 from the 317,000 figure last year. This number is now at its highest level during this business cycle (see chart below).

The data are no different for continuing claims where 3,659,000 have continuing claims for unemployment insurance. The four-week average is now 1,010,250 more than at this time last year — another high for this business cycle.

Therefore, while the headline number is good, the broader trend points to a deteriorating employment environment in the United States.

So, the outlook for employment is obviously bad, but how much worse is it getting? The data aren’t clear.

Above is a chart of the year-on-year change in non seasonally adjusted jobless claims. Notice the red circle in the previous chart shows that the year-on-year numbers fell last week and tha the numbers have not really pushed significantly higher in a month.

This is what I mean by ‘holding pattern.’ The job market is bad but it is not clear if it is significantly worse now than it was one month ago. While I do expect things to deteriorate from here going forward, the data are not showing this. And I call it like it is.

Related posts
Jobless claims up for the week
Jobless claims down for the second week
Unemployment claims finally fall, outlook still grim

  1. terry says

    Actually the “no change” in seasonally adjusted new unemployment does tell us something: Retailers are not hiring for the holiday season.

    In fact, the NSA number showed a 27,617 newly unemployed INCREASE over the preceding week. So not only are retailers not hiring, others are laying off.

    The continuing unemployment number reinforces this. While the SA number showed a drop of 12,000, the “real” NSA number increased by 94,217 week-to-week and 28,000 for the four-week SA moving average.

    Ugly, very ugly, as we approach what is supposed to be the peak sales season.

  2. Edward Harrison says

    yes, the devil is in the details! Thanks for the additional analysis. I suspect we will see this flowing through in the numbers soon along with the massive layoffs announced recently.

    We may be in a ‘holding’ pattern, but most of the risk is to the downside and I fully anticipate these numbers rising from here.

  3. Andy says

    Per the prior comments and annoucnemnt by AMEX and other FS firms over this week, the current jobless figures are just the tip of the iceberg.

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