New jobless claims rose last week, taking some of the wind out of yesterday’s inspiring rebound in ADP’s November employment report. Filings for unemployment benefits increased 6,000 to a seasonally adjusted 402,000—the first time in a month that the numbers have settled above the 400k mark. But it’s too soon to argue that the labor market is headed for a reversal of fortunes.

Let’s start with the standard caveat that weekly jobless claims numbers are forever volatile in the short term and so it’s the trend that matters. Fortunately, the trend has been mildly friendly in recent months, as the declining four-week moving average shows. Last week’s four-week average of less than 396,000 is near the lowest levels since the spring.

New claims continue to fall on a year-over-year basis as well, as the second chart below shows. Weekly filings dropped more than 10% last week vs. the year-earlier week on a seasonally unadjusted basis. That’s a bit softer than the annual decline from recent weeks, but it’s still quite strong and so it implies that there’s more positive momentum ahead for the labor market.

But let’s not spin the facts too much. New claims are up moderately for two weeks running, the first back-to-back weekly increases since early October. That alone is hardly disaster, but a third week of increases—a relatively rare even in recent history—would raise some eyebrows. Indeed, the jury’s still out on how much damage the U.S. economy will suffer from the eurozone crisis. Yesterday’s good news from ADP’s employment numbers, coupled with the powerful rally in the stock market, makes it easy to overlook the risks, but it’s premature to say the last day or so has changed much, if anything.
Still, the ADP report encourages optimism, which is only slightly tarnished by today’s jobless claims report. The next big test arrives tomorrow morning with the Labor Department’s update for November payrolls. Nothing less than a full confirmation for the ADP report is expected, or at least needed. All bets may be off if tomorrow’s statistic du jour disappoints. Yup, we’re still making this up one day (and data point) at a time.
Whatever’s in store for the economy, clues are likely to show up in new claims. Indeed, it’s been a fairly reliable leading barometer of macro’s ebb and flow and more of the same is probably on tap in the weeks and months ahead. But no indicator is perfect. Meantime, we’re in another one of those transition periods, or so it seems. That’s no surprise. Even robust leading indicators these days remain unusually dependent on decisions from dysfunctional politicians in Europe and Washington. Good luck with that!