According to Deutsche Bank, interpreting today’s initial jobless claims:
The latest jobless claims data show continued labour market improvement. Initial jobless claims for the week ending December 4th fell -17k to 421k, as the 4-week moving average fell by -4k to 427k, which is the lowest level since August of 2008. Claims appear to have broken out of their 450k to 490k range held over much of the past year, and thereby point to building momentum in the labour market-consistent with what we are observing in withheld employment tax receipts. Continuing claims for the last full week of November declined by -191k to 4086k, a low not seen since November 2008. The claims data further fuel concerns among some analysts-including ourselves-that the November employment report was unusually weak and perhaps was not indicative of the true underlying labour market trend. As shown in the accompanying figure, the trend in continuing claims is closely correlated with movements in the unemployment rate. The recent, pronounced decline in the former series suggests that the unemployment rate is due to move meaningfully lower. Case in point, over the past eight weeks continuing claims have fallen by -360k. In turn, the average monthly private payroll gain year-to-date (+106k) is now close to the level of job growth consistent with a stable unemployment rate.
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