Jobless Claims Add To Disinflation Narrative

Bond bulls and those anticipating a Fed pivot early next year were handed another piece of incremental evidence to support their case on Thursday, when jobless claims in the US printed above every estimate.

Initial claims were 231,000 in the week to November 11, the update showed. The range of estimates was 201,000 to 230,000.

The headline print counted as the highest since August 19, and the biggest weekly increase since August 5.

The four-week moving average is now 220,250, the highest in two months.

Someone will shout “Goldilocks!” and that’s fine: The US arguably does need a softer labor market to ensure inflation stays on a path back down to target, and 231,000 hardly counts as “a lot” of initial filers.

However, continuing claims were the highest in nearly two years at 1.865 million in the week to November 4. That was ahead of estimates. Consensus saw 1.843 million.

Dire narratives around a purportedly imminent spike in initial claims were a fixture of macro commentary for most of 2023. Last month, when claims hit “since January” lows, a lot of that rhetoric went silent.

Bloomberg’s Simon White on Thursday conceded that “this cycle is not playing by the usual rules.” The share of states with sharply rising claims recently receded back below a threshold associated with recession.

The most recent uptick is more likely to add to the soft landing narrative than it is to rekindle recession banter. When taken with cool reads on consumer and producer prices, this week’s claims update argued against additional Fed hikes.

Commenting earlier at a Cleveland Fed conference, Loretta Mester said the data will dictate whether more rate increases are necessary. The disinflation process, she said, will take time.


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