Nomura is sticking to its guns: These jobless claims number speak to no weakness in the labour market.
It’s all seasonal quirks:
The downtrend that was in place in Q4 2011 and Q1 2012 has stalled and begun to reverse, albeit following the same perennial pattern as in 2010 and 2011. As we continually note, the recent rise in claims appears to reflect imperfect seasonal adjustment rather than a marked deterioration. The rise should not be taken as a sign that there is fundamental weakening in the labour market. In his press conference yesterday, Chairman Bernanke acknowledged “seasonal bias” that we have highlighted, explaining, “We’re also looking at some of the seasonality issues that have arisen because of the unusually larger recession in 2008 and 2009.” Accounting for this imperfect seasonal adjustment, we believe that claims closer to the 400k level would be indicative of a weakening labour market, while claims around 360k would suggest strengthening.
The 388k initial claims in today’s report was much weaker than the median consensus estimate (reported by Bloomberg) of a decline to 375k. In fact, claims have been higher than economists’ median estimates in each of the past 5 weeks – with misses averaging 18k for the past 3 weeks. We emphasise that insofar as forecasters anticipate reversion to the February levels (in the 360k-370k range) weekly jobless claims will continue to disappoint and surprise to the upside in the coming weeks.