A very large weekly drop in initial jobless claims offers a splashy, but not definitive, indication of rising strength in the jobs market. Initial claims fell 50,000 in the January 14 week to 352,000 for the biggest drop since September 2005 when economic expansion was in full gear (prior week revised to 402,000). But weekly data early in the year are often choppy, the result of shortened holiday weeks. The 4-week average, down 3,500, points to less strength with the level of 379,000 not convincingly lower than the mid-December level of 380,750.
Continuing claims likewise show huge improvement, down 215,000 to 3.432 million. Here the 4-week average is down 34,000 to a recovery low of 3.576 million. While declines in initial claims point to an easing in layoffs, declines in continuing claims represent a mix of new hirings and new drop outs from the jobs market. The unemployment rate for insured workers slipped one tenth to 3.2 percent.
Today's report is certain to support the stock market, though questions over holiday factors will likely limit its impact. Yet should this improvement hold in next week's report, expectations for strong monthly employment data would really begin to build.
Initial jobless claims in the January 7 week rose a very steep 24,000 to 399,000. The good news was that claims were still under 400,000 for a ninth time in 10 weeks. Continuing claims also rose, up 19,000 in data for the December 31 week to 3.629 million.