Unemployment claims rose 5,000 to 333,000 in the week ending August 3rd. However, the 4-week average fell 6,250 to 335,500. The 4-week average hit a new low for the cycle slipping below the 338,000 at the turn of April/May. Unemployment claims are back at levels seen just before the start of the Great Recession in late 2007.
The seasonal adjustment factor will put upward pressure on seasonally adjusted claims numbers in the coming weeks. Non-seasonally adjusted claims tend to fall into early September, and then start rising into October and November. Thus, continued seasonally adjusted readings in the 330,000 area could be a sign of healing labor market conditions and may embolden the Fed to start its QE tapering.
The equity market has loosely tracked the direction of unemployment claims with stocks tending to trade firm when claims are flat or falling and weakening when claims are trending higher.
Here are two RTI questions:
Which labor indicator is more important in determining the outlook for QE tapering: unemployment claims or nonfarm payrolls?
Do you think that continued low unemployment claims can offset the impact of QE tapering?