Jobless Claims Fall 13,000 Despite Government Shutdown

Jobless Claims Fall To 199,000

The jobless claims report is a leading indicator for the economy and helps us understand how the monthly BLS report will look.

Lately, it has been an extremely important metric that has been followed closely because it was strong during the stock market decline in December and remains strong now as some investors wonder if economic growth is still slowing.

No indicator should be the sole reason for your positioning. Bears are trying to discredit this metric now because it is being leaned on by the bulls as a clear representation that economic growth isn’t slowing.

Soft survey data has been weak, but the hard data has been strong. The hard data is also sparse because of the government shutdown. Labor reports have been supporting the strong jobless claims readings which suggest it hasn’t gone rogue.

Jobless claims for the week of January 19th that were just released showed they fell from 212,000 to 199,000. That’s a new cycle low.

It’s the lowest amount since November 1969. It beat the consensus for 218,000. The prior week was revised from 213,000. The 4-week moving average fell from a revised level of 220,500 to 215,000. The 4-week moving average is slightly above the cycle low. The cycle low was hit in September at 206,000.

Jobless Claims - Government Shutdown Pushes Claims Higher, But They Are Still At A Historic Low

Heading into this report I was very interested to see how the government shutdown would impact claims.

Amazingly, even though the overall number dropped, Federal claims were up almost 15,000 this week to 25,400. That’s much higher than 1,650 last year.

It has been shocking to see how low claims have gotten this year. If there was no shutdown and claims were at 175,250 that would be even more of a shock. It’s quite something that this shutdown caused a 15,000 impact and claims still fell by 13,000.

As you can see from the chart below, the percent ratio of initial claims to the total labor market is by far lower than it has been at previous troughs. The labor market was much smaller in 1969 when claims were previously this low.

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