The December JOLTS report that was delayed from Tuesday is scheduled to be released later this morning. I may cover it today, or may delay until tomorrow, since there won’t be a jobs report. In the meantime, let’s take our weekly look at jobless claims which, to reiterate, are a good short leading indicator for the economy, and specifically for the unemployment rate.

One issue I have talked about almost every week in the past several years is residual post-pandemic seasonality, whereby even after adjustment claims have risen in the first half of the year, and declined in the second half. Which comes in handy today, because initial claims rose 22,000 to 231,000, except for one week the highest since early November. The four week moving average rose 6,000 to 212,250, the highest since the end of December. And with the typical one week delay, continuing claims rose 25,000 to 1.844 million, which is still one of the three lowest readings since last April:
 

The above graph shows the last three years to help show the residual seasonality I have often spoken of.

On the YoY basis more important for forecasting purposes, initial claims were up 4.1%, but the four week average remained lower by -2.5% and continuing claims were down -1.6%:

Thus, despite the noisier one week number, the trend remains positive. Additionally, this adds to the evidence that post-pandemic residual seasonality remains at work.

Finally, although we won’t get the January jobs report until next week (unless something changes again), here is a look at initial and continuing claims, averaged monthly (blue and gold, right scale), compared with the unemployment rate (red, left scale) for the past three years:
 

Initial and continuing jobless claims have generally trended downward since September. That strongly suggests that the 4.5% unemployment rate in the November jobs report was the high water mark, and that the unemployment rate will trend downward over the next several months (although it might remain at 4.4% next week).

ADDENDUM: I was asked over the weekend at Seeking Alpha why initial claims are so low, even with job growth almost completely stalling. One possible explanation was the effect of ICE immigration raids on immigrant communities — but if that were the case, I would expect especial declines in the States targeted by ICE so far; mainly California, Illinois, and Minnesota. But the state by state breakdown does not show any such outliers. The best explanation is that demand (mainly by the top 10% of consumers) has still been growing, so there has been little incentive to lay workers off; but on the other hand, uncertainty due to the chaos in Washington, plus in some sectors an impact from AI on hiring has led to caution.

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