Jobless Claims Continue Near Historic Lows, Forecast Continued Declines In The Unemployment Rate

Let’s take our weekly look at jobless claims. A reminder: I do this because it is a very good leading indicator for the unemployment rate, as well as 1/2 of my “quick and dirty” tool along with stock prices for forecasting the short term economy.

And the news on new jobless claims continued to be excellent, as they declined -10,000 back under 200,000 to 196,000. The four week moving average declined -2,750 to 203,000, also among the lowest readings in the past 50 years, while continuing claims with the usual one week delay declined. -39,000 to 1.730 million, the lowest in over 2 1/2 years:

On the YoY% basis more useful for forecasting, initial claims were down -15.9%, the four week moving average down -15.0%, and continuing claims down -10.1%:

If anything, the positive comparisons are intensifying, which is also a very positive sign for the economy in the next few months. In particular, if the oil price spike intensifies enough, I would expect increased layoffs in advance of any downturn caused thereby.

Finally, let’s take out initial look at what this likely means for the unemployment rate in the next several months:

The last time jobless claims were at this level, not only was the unemployment rate below its current 4.1%, it was below 4.0%. In other words, this forecasts that the unemployment rate in the next several jobs reports is likely to go down further.