The Department of Labor announced this morning that new Unemployment Insurance Claims rose by 25,000 on a seasonally adjusted basis to 559,000, which was a little bit of a surprise.
On a seasonally unadjusted basis, the number of new claims dropped by 78,111. Last week, the number of new job ads jumped by 84,000 on a seasonally unadjusted basis. As new job ads increase, more workers are absorbed into the labor force, reducing UI claims.
The 4-week moving average dropped by 8,250 claims. However, this week's jump puts the 4-week moving average very close to reversing its "improving" trend. If next week's release puts new UI claims above 569,000, the 4-week moving average will increase, reversing the trend. Remember that the NBER has identified the "start" of the recovery period as occuring 8 weeks after the peak in new UI claims in the past several recessions. Stock markets have been bullish, however.
Our Hiring Demand Indicators saw some slight weakness in mid-July, but have picked up since then. Given last week's improvement in the number of new job ads, and stability in the seasonal correction coeficients for next week, we expect that new UI claims will fall next week on a seasonally adjusted basis.
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