Claims Data

October 13th, 2016 8:56 am | by John Jansen |

Via Stephen Stanley at Amherst Pierpont Securities:

Initial jobless claims continued to surprise to the downside, plumbing depths not seen in a very long time.  Initial claims were unchanged in the week ended October 8 at a downwardly-revised level of 246,000, the lowest reading since 1973.  The four-week average broke below 250K for the first time in 43 years.  This marks a clear move to the downside, as the average in the first half of the year was 269K, a level we have not seen, even once, since June.  Not that we should be shocked.  When the labor market gets very tight, firms do not want to lay off anyone that they suspect they might want to re-hire at some point because chances are, they will not be available when the firm tries to call them back.

Meanwhile, the total number of people collecting benefits declined by 16K to 2.046 million, the lowest reading since June 2000.  However, the workforce was smaller then.  The insured unemployment rate has moved down to 1.5% (this is the 7th time at that level in total this year and the fourth week in a row) , the lowest on record (going back to 1970).  That includes the 2000 period when the unemployment rate had a 3-handle.  So, there may be 3 or 4 doves on the FOMC who still believe that there is substantial slack in the labor market, but the more compelling argument in my view is that we are moving/have moved into clearly tight territory, which is why wage hikes are (finally) accelerating to a pace in excess of what productivity growth and cost-of-living adjustments would dictate..

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