Image Source: Pixabay

Last week the initial claims numbers justified restarting the yellow caution flag. This week initial jobless claims declined -13,000 to a 6+ month low of 216,000. The 4-week moving average declined -8,500 to 229,250. With a one-week lag, continuing claims declined 40,000 to 1.679 million:

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Since last year at this time also saw a steep decline, it is possible that there is some unresolved post-pandemic seasonality in these numbers.

The YoY% changes were +9.6% for the weekly number, +11.3% for the more important 4-week moving average, and +27.6% for continuing claims:

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Additionally, and most importantly of all, the monthly average for August was up +13.1%:

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Recall that in the nearly 60-year history of claims, 2 consecutive months of YoY% increases in excess of 12.5% have more often than not meant that a recession is close to beginning. Between the monthly YoY increase, and the +10.3% increase YoY in the 4-week average, there is enough to justify a yellow flag caution - although if we continue to get numbers like this week’s 216,000, that won’t last long.

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