US DATA
Initial jobless claims were steady in the Dec 21 week, coming in at 219k (220k prior, unrevised), thus coming in a little below the 223k expected. However, continuing claims (Dec 14 week) were more mixed: the 1,910k was above the 1,881k expected but this was offset by a 13k downward revision to prior (1,864k). The current seasonally-adjusted continuing claims level is the highest since November 2021, though, with the 46k rise the 2nd-biggest of the year.
- The trends in each series remain indicative of a labor market that is cooling without any signs of significant deterioration.
- The 4-week average of initial claims ticked up for the 4th consecutive week but at 227k is below the 230+k seen in the summer, and weekly prints around current levels suggest that the trend is moderating anyway.
- The rise in continuing claims level is more concerning - it does not appear to be the result of an undue seasonal adjustment (NSA was +95k to 1,959k), and as noted this is the highest reading in 3+ years despite no clear idiosyncratic driver (California was the biggest NSA driver, but not unusually for this week of the year, while Hurricane-hit states continue to see claims diminish).
- We will see in coming weeks if the continuing data is a one-off or a sign of a more significant deterioration. In general it underpins the narrative of a softening, lower-turnover labor market.
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