Today’s update on weekly jobless claims continues to signal growth for the labor market in the near term. Yes, it’s a modest pace of growth, but it’s likely to roll on for the foreseeable future. That’s the message once again in today’s report on new filings for unemployment benefits, which fell 5,000 last week to a seasonally adjusted 366,000, the Labor Department reports. Indeed, new claims are approaching the levels that prevailed before the last recession started. Combined with this week's upbeat news in the January readings of the ISM Manufacturing and Non-Manufacturing indices, today's claims report offers another data point for thinking that 2013 is off to a decent start. We'll know more once all the January numbers are in, but the preliminary indicators to date leave plenty of room for optimism.
As for today’s claims report, the trend certainly looks encouraging. The four-week average dipped to 350,500 last week. That’s near a five-year low, which means that the four-week average is telling us that the modest healing underway in the economy appears intact.
The year-over-year percentage change in unadjusted claims data supports an optimistic outlook. New filings were roughly 4% lower last week compared with a year ago. More importantly, the raw claims data has continued to decline on an annual basis for more than two years. This persistence has been, and remains, a key indicator for expecting that the labor market will expand further in the months to come.
Keep in mind too that a broad review of economic and financial indicators also paints an optimistic profile. As I noted last month, The Capital Spectator Economic Trend and Momentum indices (ETI and EMI) reflected growth overall through December. A month later, with several more economic reports in hand, the upbeat profile remains no less persuasive.
I’ll update ETI and EMI next week. Meantime, the numbers so far imply that recession risk remains low, as it has all along. Yes, one day that will change, but at the moment the data, overall, speak rather clearly: moderate growth remains the path of least resistance.