US jobless claims plunged last week to the lowest in more than 50 years, data out ahead of the Thanksgiving holiday showed.
199,000 Americans filed for unemployment benefits in the week to November 20, down 71,000 from the prior week’s upwardly revised level.
It was the largest drop since May (figure below) and took the four-week moving average to a new pandemic-era low of 252,250.
While welcome, the headline print is likely misleading. A quirk in the seasonal adjustment element may have contributed to the large downside surprise.
“The jobless claims data should be taken with a grain of salt,” Wrightson ICAP chief economist Lou Crandall said, in a Tuesday note. “We expect a very large decline in reported filings, but the ‘improvement’ would be due entirely to seasonal adjustment distortions,” he added.
Still, you’d be inclined to think that someone, somewhere would have baked that into their forecast. They didn’t. Or at least not entirely.
The range, from 42 economists, was 210,000 to 276,000. Consensus was looking for 260,000 on the headline.
“[It’s] kind of hard to take at face value, given the magnitude of the surprise,” Bloomberg’s Cameron Crise wrote. “But if it’s anything like accurate then it certainly suggests the labor market is very tight indeed.”
Continuing claims for the week of November 13 disappointed, printing 2.049 million against expectations for 2.032 million.
Although it makes for good press and as such, will almost surely be touted by the White House, it’s probably a mistake to read too much into the “since 1969” headline.
That didn’t stop me from using it, though.
