Last Week’s Rise In Jobless Claims Is Good News… Really

US jobless claims climbed 11,000 last week, which is no trivial amount. But this is bullish news. Why? Because the previous week’s extraordinary decline—down 42,000 for the week through Jan. 24 in today’s revision—was only moderately pared back. The thinking last week was that the shortened Martin Luther King holiday skewed the data, which inspired forecasts that today’s number would pop sharply higher in a bout of payback. The consensus forecast called a hefty gain today, with claims projected to rise to 290,000. But as today’s release shows, quite a lot of the recent slide remains intact in today’s report. The news translates to a bullish update for anticipating the near-term outlook for the labor market, starting with tomorrow’s official payrolls report from Washington.

New filings for unemployment benefits rose last week to a seasonally adjusted 278,000. But that’s still close to a 15-year low. The weekly figures can be volatile—duh!—and so the year-over-year trend offers a more reliable picture for this leading indicator. But here too the data satisfies: claims dropped a hefty 15.2% last week vs. the year-earlier level.

In fact, claims have been trending lower on an annual basis in each and every weekly update since last September. As robust clues about the economic outlook go, new filings continue to shine, delivering a bullish signal that’s proven to be quite durable in recent years.

Sure, private-sector employment growth has slowed on a monthly basis through last month, according to ADP’s data. But as I noted yesterday, the annual rate of growth by ADP’s reckoning still ticked up in January, the strongest advance in more than two years.

The bottom line: in light of the recent trend in claims figures, along with yesterday’s ADP release, tomorrow’s jobs data from the Labor Department appears poised to deliver another upbeat report. It’s still debatable if the US economy is genuinely accelerating on a sustainable basis. But the case for seeing moderate growth ahead remains a solid forecast.

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