US jobless claims lowest in 5 years

[southsider2k5]

U.S. initial jobless claims plunge to 5-year low

By Rex Nutting, MarketWatch

Last Updated: 9:37 AM ET Jan 5, 2006

 

WASHINGTON (MarketWatch) -- The number of people filing for U.S. state unemployment benefits plunged by 35,000 to a seasonally adjusted 291,000 in the week ending Dec. 31, the lowest since September 2000, the Labor Department said Thursday.

 

A spokesman for the Labor Department cautioned that the jobless claims data are very volatile this time of year because of holidays and the large expected swings in seasonal employment. The government attempts to adjust the data for those factors. Read the full report.

 

"I would argue strongly that market participants would be wise to pretty much ignore this figure, though I realize that will be a difficult thing to do 24 hours before payrolls," said Stephen Stanley, chief economist at RBS Greenwich Capital.

 

 

 

The drop in claims cannot be easily dismissed, said Drew Matus, an economist for Lehman Bros. "It does support our view that tomorrow's payroll report will be close to 200,000 and that the unemployment rate will dip to 4.9%."

 

The four-week moving average of new claims, which smoothes out some of the weekly volatility, fell by 9,750 to 316,750, the lowest since Aug. 20, just before Hurricane Katrina leveled much of the Gulf Coast.

 

Before the most recent decline, new claims had stabilized in the past two months in a tight band between 320,000 and 335,000 after surging to 435,000 after the hurricanes.

 

New filings in this range are consistent with steady job growth of about 200,000 per month, economists say.

 

The figures come a day before the Labor Department reports on December job growth and unemployment. Economists expect nonfarm payrolls to grow by about 207,000 in December, close to November's 215,000 gain. The jobless rate is expected to remain at 5%.

 

In a separate report, Challenger, Gray & Christmas reported that planned layoffs increased 8.6% in December to 107,822, while layoffs increased 3.1% in 2005 to 1.07 million. See full story.

 

Meanwhile, the number of people collecting unemployment benefits rose by 13,000 to 2.72 million in the week ending Dec. 24. It's the fourth increase in a row. The four-week average of continuing claims rose by about 33,000 to 2.66 million.

 

The insured unemployment rate - the ratio of those receiving benefits to those workers eligible -- remained at 2.1%.

[Balta1701]

The one thing I've learned about January and December is that the "Seasonally adjusted" part of that number is the real key.

 

The DOL attempts to "Seasonally adjust" for economic conditions in those 2 months by expecting significant amounts of hiring in October-December, and significant amounts of layoffs in January. So, they factor those numbers out in order to try to get at the "Core job growth" to coin a phrase.

 

The odd part about those seasonal adjustments is that it only takes a slight variance in the Christmas hiring and layoff patterns to produce something that looks really wierd. For example, if your Christmas hiring season doesn't go as well as usual, you wind up with poor job growth numbers before christmas, but in January there wind up being fewer layoffs reported, so the January numbers wind up looking spectacular.

 

There's a reason this is happening in early January...for all we know this is the effect of the growth of gift cards over the past few years - businesses holding onto temporary employees 1 week longer than before so that they have staff to handle those shoppers.

 

Those numbers are probably not a bad sign, but they're not a good sign either, in fact I'm not sure if they tell us anything of value given how volatile the christmas season numbers get. The January monthly job report will probably tell us more simply by filtering out some of the high frequency stuff, but again it suffers from the same seasonal adjustment imperfections, albiet to a smaller degree than the weekly numbers.

[YASNY]

Those numbers are probably not a bad sign, but they're not a good sign either, in fact I'm not sure if they tell us anything of value given how volatile the christmas season numbers get. The January monthly job report will probably tell us more simply by filtering out some of the high frequency stuff, but again it suffers from the same seasonal adjustment imperfections, albiet to a smaller degree than the weekly numbers.

 

Those numbers are better sign than we've had in any other recent January, unless we didn't have a Christmas season in the years immediately prior to those particular Januarys.

[Balta1701]

Those numbers are better sign than we've had in any other recent January, unless we didn't have a Christmas season in the years immediately prior to those particular Januarys.

Like I said, that doesn't really mean anything yet...it could just mean that companies are holding onto their temporary workers for 1 week longer to handle gift cards, or it could even be an artifact of the fact that Christmas fell on a weekend so temporary worker layoffs didn't register yet. The fact that they're great doesn't tell you that much - i

 

n Jan of 02, our nation's job growth went through the roof for 1 month, but it didn't mean anything aside from the fact that during the Christmas season temporary worker hiring was exceptionally low, so there were fewer temporary workers to lay off than the seasonal adjustments expected, so the numbers came out as job growth when the entire number was due to the lack of layoffs due to the lack of hiring the previous winter.

 

I'm not saying they're a bad sign, but you can't take 1 week's numbers during an exceptionally volatile period with high seasonal adjustments as a sign of really anything.