Drop In Initial Jobless Claims Continues Divergence With Continuing

Initial jobless claims unexpectedly fell to 202k in the Dec 9 week, vs consensus that it would remain steady vs the prior week at 220k (which ultimately was revised up 1k to 221k). That's the lowest reading since hitting 200k in mid-October, and the 2nd lowest reading in the past 11 months.

• Continuing claims were 3k lower than expected for the Dec 2 week at 1,876k - but a tick higher from the prior week which was revised 5k lower (1,856k). While this may suggest a resumption of the trend higher since September, it remains below the cycle high of 1,925k set in the Nov 17 week
• Fed Chair Powell at Wednesday's post-FOMC decision press conference pointed to "claims are low" as one reason to think the labor market had come into better supply-demand balance.
• It wasn't clear whether he was referencing continuing or initial claims - which tell slightly different stories at this stage, though rising continuing claims are likely reflecting reduced labor market churn. The initial claims reading belongs more into the "tight" than "loose" labor market camp as the Fed enters 2024.