As we discussed in last night’s Closer and a blog post yesterday, weekly initial jobless claims moved back to 211K, the lowest in over two months and a pretty healthy print. While initial claims have been fairly volatile and more recent prints have been reassuring that recent highs are not a new trend, continuing claims have more steadily been working their way higher.
We made a diffusion index of the 50 states using this data to get a better idea of the health of these labor market indicators. In these indices, higher readings indicate more state-level claims falling, while lower numbers indicate more state-level increases. The index for continuing claims continues to appear fairly healthy. The index number has fallen, meaning an increasing number of states have been seeing increases in jobless claims, but this is far outweighed by states still seeing declines.
The diffusion index for initial claims, like the headline numbers, are telling a different story. On January 19th, the index had fallen as low as 15 which was the weakest reading since 2012. More recently, though, the number has been stronger, coming in at 28 this week; down from 30 last week.
Averaging the two, the current reading is 36. Overall that is neither a strong or weak number, but it is still in stronger shape than the past several years lows in 2016. All in all, while claims have improved in the past few weeks and are not flashing recessionary signs, they should continue to be watched for signs of further deterioration.