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January 10, 2008
First time unemployment insurance claims week ended January 5: 322,000 (Consensus forecast: 340,000), down from prior week’s 337,000 (revised from 336,000).
Continuing unemployment insurance claims week ended December 29: 2,702,000, down from prior week’s 2,754,000 (revised from 2,761,000)
Initial claims fell for the second week in a row, dropping to the lowest level since the beginning of November (317,000 initial claims week ended November 3).
The report wrapped up the full year 2007: the average of initial claims was 322,173 – up almost 3% from 312,173.
The weekly average for first time claims in the 4th quarter was 335,846 – up 6.7% from 314,846 in the 3rd quarter. The quarter average was the highest since 3Q 2005.
The drop in continuing claims was the first since the end of November and only the second in the last seven weeks. In that span though, continuing claims increased a net 148,000, 5.8%.
Four week moving averages:
Initial Claims: 341,000 down from 344,000 the prior week.
Continuing claims: 2,701,750 up from 2,684,750 one week earlier; the highest four week average since November 5, 2005 (2,722,750).
What it means
While there was good news in the weekly report on both initial and continuing claims this week, the dip didn’t change the longer term trend up of both data series as suggested by four-week and quarterly averages. This is a highly volatile series which argues against a definitive analysis of week to week fluctuations. Among the factors influencing the weekly trends would be weather and holidays. In general the weekly data are consistent with the softer labor market depicted in the monthly employment report: continuing claims serving as a leading indicator of weak hiring trends.