Combined with slowing job losses and increases in Hiring Demand (which are a leading indicator), this week's Unemployment Insurance Claims report cements the idea that an economic recovery is on the horizon. After 9 weeks of almost uninterrupted improvements this week's data allows for cautious optimism.
On a seasonally adjusted basis, the 4-week moving average of new jobless claims rose by 8,500 claims. However, this slight increase does not put at risk the recent trends in labor market data.
Professor Hamilton has much discussed how the National Bureau of Economic Research (NBER) has identified the 8th week after the peak in UI claims as the start of recovery. The 4-week moving average of new UI claims peaked on April 4th, when there were 658,750 claims. That was 18 weeks ago. UI claims dropped consistently for several weeks but picked up again May, which was matched in our Hiring Demand Indicators. On May 30th, there was a "local maximum" for UI claims, at 632,250 claims. That was 9 weeks ago. Professor Hamilton figures that there's 85% chance that April 4th will be identified as the peak.
On a seasonally unadjusted basis, there were 13,000 more claimants this week as the number of new job ads fell by 56,000. The week before, new claims had fallen by 45,000 claims as job ads rose by 14,000. The following time series plot new UI Claims and the number of new job ads, on a seasonally unadjusted basis. The UI claims axes has been inverted to facilitate analysis.
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