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Very interesting comment from Nomura on today’s initial jobless claims number, which came in at 357K, down from a revised 363K last month.Initial jobless claims, relative to the size of the labour force are now at 0.231%, which is the lowest share since the recession began in late December. In the previous labour market cycle it took a similar amount of time to reach this ratio and in the 1990s recovery it took nearly 6 years, implying that current jobless claims are normalizing in a range of 350,000. When the ratio has been much lower than it is now, firms have been hoarding labour during times of low unemployment. At this stage of the cycle, a decline in claims becomes a less useful signal of labour market strength as a pick-up in hiring, as opposed to a drop in layoffs, takes on greater importance.
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