Initial Claims Suggest The Unemployment Rate Will Drift Back Close To 50 Year Lows

Initial claims increased 25,000 last week from their near all-time lows to 214,000. The four-week moving average declined by 1,500 to 202,250, only about 12,000 above its 50-year low set in 2022. Finally, with the usual one-week delay, continuing claims rose 27,000 to 1.833 million:

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The relative upward stickiness of continuing claims appears to be a result of laid-off Silicon Valley workers having difficulty finding suitable new employment.

On the more important YoY% basis for forecasting, claims we up 10.3%, but the more important four-week average was only up 0.5%. The four-week average has been running very close to unchanged YoY for 1.5 months.  Continuing claims were up 10.6%:

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Since initial claims lead to the unemployment rate, the 4-week average suggests no further weakening for the jobs market. Here’s a look at initial claims averaged monthly (blue) compared with the unemployment rate (red):

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This suggests that we won’t see higher than 3.8% unemployment in the next few months, and are more likely to drift down towards 3.5%, close to its 50-year low of 3.4%

The jobs market remains positive.

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