Jobless claims increase by 10,000, less than expected
Initial claims for unemployment insurance rose to 247,000 in the week ended January 7, a less pronounced increase than what was expected by consensus forecasts, although still representative of an increase of 10,000 from the previous week’s revised print of 237,000.
The four-week moving average of jobless claims edged modestly lower to 256,500, having trended downward in recent weeks. Despite that, claims remain broadly in line with its range over the second half of 2016. Markets will more than likely view today’s reading as confirmation of continued strength in the jobs market rather than being indicative of a change in trend.
A jobless claims level of below 300,000 is generally indicative of a healthy labor market. This morning’s release marks the 96th consecutive week that jobless claims have come in below that threshold, which is the longest such streak since 1970. With the 4-week average still hovering around 250,000, claims remain near their lowest levels in over 40 years.
Job creation slowed moderately in 2016, but remains in a range consistent with a steadily growing economy. December job gains undershot expectations, as nonfarm payrolls increased by a seasonally adjusted 156,000. As labor market conditions tighten and the economy nears full employment, job creation typically slows – not because the economy is stumbling, but because it becomes more difficult to fill open positions.
From a seasonal perspective, jobless claims typically rise after the holidays as seasonal retail positions are eliminated. That predictable development is addressed in statistical adjustments made by the department of labor. This year, claims are also expected to be somewhat elevated as retailers such as Sears and Macy’s have announced plans to shutter additional stores following a lackluster holiday season.
Historically, jobless claims have served as a leading indicator for the health of the labor market and for the economy as a whole. Though job creation has slowed moderately, jobless claims remain in a very constructive range and are still evidence of an environment in which turnover is low and employers are generally content to maintain and expand their payrolls.