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Labor market update

Weekly unemployment claims last week were higher than expected (399K vs. 375K), but the miss was well within the range of error at this time of the year, when claims always post their biggest increases and seasonal adjustments can be tricky. As the chart above shows, the 4-week average of claims is still firmly within a declining trend.

December claims represented only 0.28% of payrolls, a level that was better than most of the go-go years of the 80s. Employers are firing fewer and fewer people, which suggests that businesses have undergone most of the restructuring and cost-cutting needed to survive. The jobs market is thus less vulnerable to future disruptions.

The number of people receiving unemployment insurance always rises at this time of the year, but relative to the same time last year, the number is down 18%, or 1.5 million people. This is undeniable progress, even though the ranks of the unemployed are still extremely high.

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