U.S. jobless claims fall to 3-month low, still over 600,000

Jobless claims in the U.S. fell to a three month low of 610,000 on a seasonally-adjusted basis in another clear sign that fewer people are filing for jobless claims than early in the year.  Nevertheless, 600,000 more filed for claims this past week and a record 6 million are still claiming benefits.

I have been fairly clear recently that I see the decrease in jobless claims data and comparisons to last year as signs of an incipient (but weak) recovery.  The so-called second derivative changes i.e. a decrease in comparisons to year-ago data are the ones I believe most important in looking at directionality. However one should note that analysts like David Rosenberg do not believe these signs portend a recovery. Time will tell who is right here.

As for those second-derivatives, the data is getting better for initial claims and worse for continuing claims. Non seasonally-adjusted (NSA) comparisons to a year ago are as follows:

• 4-week average initial claims are 257,000 higher, down from a peak of 327,000 on Jan 24th. Seasonally-adjusted comparisons are now worse at 280,000 meaning that seasonal catch up here is over.
• 4-week average continuing claims are 3.2 million more than last year.  That is massive and still increasing.  Moreover, this number is 400,000 in excess of the seasonally-adjusted data.  I should also note that many people who no longer qualify for benefits are still unemployed meaning the unemployment rate is still rising quite rapidly.

Source
Unemployment Insurance Weekly Claims Report – U.S. Department of Labor