New unemployment claims are compiled weekly to show the number of individuals who filed for unemployment insurance for the first time. An increasing (decreasing) trend suggests a deteriorating (improving) labor market. The four-week moving average of new claims smoothes out weekly volatility. Why Investors Care
| Released on 2/7/08 For wk 2/2 2008 | ||||||||||||
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Highlights
Last week's disappointing jump in initial claims is unfortunately confirmed by the latest data. Initial claims came in at an elevated and higher-than-expected level of 356,000. Though a big 22,000 improvement from the shocking 378,000 level of the prior week, the current level is way above the 300,000 mark claims were near at mid January. Continuing claims are also elevated, up again in the latest data and at their highest level in more than 2 years at 2.785 million. The Labor Department said there were no special factors affecting the report.
Seasonal adjustments had a big effect on claims data at the beginning of the year. But as their impact has eased, claims are indicating deteriorating conditions in the labor market. There was no significant immediate reaction but the data are a negative for the dollar and stocks and a plus for Treasuries.
Initial jobless claims surged in the latest period due to a holiday shortened reporting week. Initial claims soared 69,000 to 375,000 for the week ending January 26 -- the worst level in more than two years. Difficulty seasonally adjusting the week which included the Martin Luther King holiday (Monday, January 21) resulted in the huge spike. The surge followed very low initial claims in recent weeks. But after the dip in payroll employment for January, the question is whether the latest numbers reflect the technical difficulties of seasonally adjusting during winter and holiday months or reflect true weakness. Markets will be watching to see if claims return to prior levels or whether they stay high pointing to possible recession.
Jobless Claims Consensus Forecast for 2/2/08: 343,000
Range: 330,000 to 360,000
![[Chart]](chart.gif)
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Weekly series fluctuate more dramatically than monthly series even when the series are adjusted for seasonal variation. The 4-week moving average gives a better perspective on the underlying trend. |
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