Jobless claims dove again in the week to December 4, hitting a 52-year low for the second time in three weeks.
184,000 Americans filed for unemployment benefits during the period, 36,000 fewer than expected and 43,000 less than the prior week’s upwardly-revised level.
Initial claims now sit at the lowest since September 6, 1969 (figure below).
The four-week moving average fell to just 218,750. That was the lowest since March 7, 2020.
The range of estimates was 160,000 to 321,000. So, in contrast to the late November plunge, at least someone expected to see a headline print as low as the one the market actually got. Unadjusted claims rose from the prior week.
“The numbers are impressive to be sure and consistent with the ongoing positive sentiment regarding the employment market,” BMO’s Ian Lyngen remarked. The simple figure (below) gives you a sense of the magnitude of the drops seen in two of the past three weekly reports.
Continuing claims in the week to November 27 were 1.992 million, in line with consensus.
Invariably, economists will cite seasonal adjustment quirks and other “distortions” for what some will surely call a misleading headline.
The most important takeaway for market participants, though, is that the numbers are incremental evidence to support the Fed’s inclination to announce an accelerated taper.
Initial claims at 52-year lows for two out of the past three weeks plainly suggests the labor market has momentum — distortions or no distortions.
Employers are hoarding employees. Would be curious about hours worked. The more I think about all this data the murkier it becomes. The economy is clearly going through a major structural shift for the third time in 22 years.