After Friday’s weaker than expected Nonfarm Payrolls report, today’s initial jobless claims release is setting a different tone for labor data. Initial jobless claims were expected to see a modest decline to 215K this week after rising for two straight weeks. Instead, claims came in well below estimates falling to 204K. Not only was this well below last week’s upwardly revised 219K (the largest week-over-week decline since May 10th’s 16K decline) and forecasts, but it was also the lowest print since April’s 193K. Important to note, those April lows were the lowest readings in around 50 years. Although that low from only a few months ago was not taken out, jobless claims still appear healthy with this week’s data bringing it back below the past few months’ range. The overall claims reading is also now more within tangible reach of those aforementioned 50-year lows. Furthermore, SA jobless claims have now spent 236 consecutive weeks at or below 300K and 101 weeks at or below 250K; both the longest streaks on record.
As we mentioned in a note last week, today’s release was likely to see a move lower in the four-week moving average because a recent high of 221K from early August would be rolling off the count. Between that and the exceptionally low number this week, the four-week moving average experienced a 4.25K decline which was its largest decline since mid-July (-5.5K). We would caution though that one week does not necessarily make a trend. The average now sits at 212.5K, which is an improvement from August, but it is also not yet any sort of dramatic new low as with other reads on this indicator. The moving average is now back to where it was only in late-July/early August. Additionally, the moving average is actually 0.75K higher than it was for the current week last year.
We have mentioned in recent weeks that due to seasonal effects we usually see the yearly low in NSA claims at this time of year. As a result, this would give a good read on how this year’s lows stack up to prior years. The NSA number did not disappoint, dropping to 159.3K. Not only was this 3.3K lower than the comparable week last year, but was also the lowest reading for any given week of the current cycle. Even more impressive, this was the lowest reading for the NSA data in just under 50 years. The last time NSA initial jobless claims were at or below 159.3K was back on October 18th, 1969 when the number was 155K. That was also only a month after the indicator’s all-time low of 133K. Start a two-week free trial to Bespoke Premium for our most actionable investment ideas.