“Yet another increase in initial jobless claims has worried some investors. However, on a non-seasonally adjusted basis, claims show no signs of unusual movement,” TD Securities analysts argue.
Key quotes
“At 239K, claims remain well below historical levels “” even more so if the substantial growth in the labor force is taken into account. Increases like those seen recently are typically reversed unless we are already in a recession.”
“Claims would have to rise substantially further to realistically signal that a recession is around the corner. Since 1967, claims have risen to an average of over 330K by the time a recession begins “” and peak much higher still, as claims are more a coincident than a leading indicator. The threshold would be even higher if claims are adjusted for growth in the labor force: above 460K.”
“Claims are only marginally above their cycle low of 200K observed in mid-January. Historically it takes on average 15 months from the time claims hit bottom until a recession begins, and never fewer than 9 months. We have time.”
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