Despite the various concerns about slowing economic growth raised by the main stream media recently, one of the best leading indicators has yet to flash any warning signs. Specifically, first-time claims for unemployment benefits ended last week at 216K, better than anticipated and just fractionally above the half-century low (202K) hit earlier this year. This was also the 199th sub-300K print in a row, one of the longest streaks in history and especially impressive since the labor force is much larger now than during past sub-300K runs.
Moreover, the less-volatile 4-week average for initial jobless claims slid to the lowest level since November and as a percentage of the civilian labor force is about as good as it has ever been (see below). Even if overall job creation continues to cool, these incoming claims figures still signal a tight labor market where employers are reluctant to let go of the talent they currently have. This would not be the case if businesses were trying to slash costs across the board and is in part why a spike in initial claims has preceded every recession. With the holiday shopping season coming to an end, the weekly claims figures could be a bit noisy over the next few weeks, but alarm bells should not be going off until there is a sustained shift upward.
*Note: The November report on new home sales from the Census Bureau was scheduled to be released this morning but was delayed due to the government shutdown.*
Sources: Econoday, U.S. DoL, FRBSL
Post author: Charles Couch