The big, bad revision that's supposed to correct last week's computer glitch in calculating initial jobless claims didn't arrive in today's update. Maybe next week. In the meantime, today's release continues to show a labor market that's laying offer fewer workers through time. Maybe it's all an illusion, in which case prepare to be dragged back into reality in the near future. But let's engage in an experiment and consider the data offered as a reasonable proxy for what's actually unfolding.
By that standard, new filings for unemployment benefits rose last week by 15,000 to a seasonally adjusted 309,000. That's a substantially lower increase than expected by some consensus forecasts -- Econoday.com, for instance, reported that economists overall anticipated a rise to 341,000 in today's release.
It's safe to say that noise plagues this data series in the short run, and perhaps more than usual these days. But it's also standard operating procedure at CapitalSpectator.com to look past the latest volatility in a bid to see the trend in new claims with a higher degree of clarity. On that note, consider that the year-over-year change in claims (before seasonal adjustment) continues to fall at a healthy clip. Last week's unadjusted number dropped by nearly 18% vs. the year-ago level. As the chart below reminds us, the degree of decline is quite steep relative to recent history. That's a strong clue in favor of arguing that the labor market is still poised to grow for the foreseeable future.
In short, today's update on jobless claims again suggests that the labor market is healing, perhaps more so than we've seen in previous months. Could it be a head fake? Sure, anything's possible in the dark art of deciphering macro's tea leaves. But keep in mind that the latest trend profile of the U.S. economy (published earlier today) continues to suggest that recession risk is low. Putting it all together implies that moderate growth will prevail for the near term. The fallout from computer glitches can't be discounted, but we're still optimistic that a broad set of indicators still impart valuable perspective for deciding how the economy is faring. And for moment, you can add the number du jour to the list of positives.