Thursday, January 31, 2008

Weekly Initial Unemployment Claims Spike Up

There were 375,000 initial unemployment claims last week. This is an increase of 69,000 from the previous week. Initial unemployment claims had been low suggesting that the U.S. had not yet entered into a recession.

Last week's jump was the largest weekly jump since Hurricane Katrina in 2005. Before that you have to go back to 1996 for a larger weekly jump.

Initial unemployment claims are a good leading indicator for the unemployment rate. However the data is very noisy (large jumps up and down). If this weeks jump is continued in the future weeks, then it looks like the unemployment rate will follow. Looking at a four week average, the weekly claims level is still at a relatively low level at 325,750.

The Initial weekly unemployment claims are one of the 10 indicators in the Leading Index that is published by the Conference Board (see this post for more info).


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