Last week’s rise in new filings for jobless claims added another data point to the case that the downtrend has hit a wall in this critical measure of the labor market's trend.
In the week ending Feb. 20, seasonally adjusted initial claims rose to 496,000 from 474,000 in the previous week, the Labor Department reports. That’s the highest since last November. Even more discouraging is the heightened risk that the general decline in new filings is over, at least temporarily. If so, the recovery in the labor market, which has yet to begin in terms of net job creation, may be facing a new headwind.
One reason for thinking so comes from our chart below, which seems to be saying that the downward momentum in this measure has evaporated. (Click to enlarge)
Today's news of another rise in jobless claims isn’t a total surprise. We’ve been reading the statistical tea leaves for weeks (here and here, for instance) and wondering if something had changed in the formerly sinking number of new claims for jobless benefits. Today’s number only raises the stakes.
It's possible that there are technical reasons for the rise. Maybe February is a quirk. Although the numbers in our chart above are seasonally adjusted, there may be one-time variables that make recent readings anomalous. But it's getting harder to think so as the upward trend rolls on.
At the very least, the labor market is at a critical juncture. The massive monthly losses in nonfarm payrolls have more or less faded. But net job creation in the private sector on a sustainable basis remains MIA. The recent trend in new jobless claims doesn’t offer much reason to think that there’s an imminent change for the better in the next round of data.