Deutsche Bank are confident today’s positive initial claims data is just the beginning of the turnaround for U.S. unemployment news.
In fact, they’re so confident, they’re projecting a major move in the unemployment percentage due to changes in the insured rate of unemployment.
From Deutsche Bank (emphasis ours):
The insured rate of unemployment, which is the ratio of continuing claims divided by the number of people covered in state unemployment insurance programs, fell 0.1% to 3.3%, the lowest reading since December 12, 2008. We highlight this series because it is highly correlated with the unemployment rate and hints we could see a 0.2% drop in the November unemployment rate to 9.4% when the data are released on December 3.
So that’s not exactly a massive drop, but it might get better.
If initial and continuing claims continue to trend lower, then it will point to a faster pickup in hiring. In order to gain confidence that we are on the cusp of large, persistent increases in payrolls, such as 300k per month, we believe initial claims have to get below 400k on a sustained basis. With respect to employment, we are estimating a +150k increase for November nonfarm and private payrolls.
So we’re not yet that, but the trend is solid.