US DATA
Jobless claims hit multi-month lows in the most recent weeks of data, in another sign of labor market resilience at the end of 2024.
- Initial claims in the Dec 28 week fell to 211k from 220k (rev from 219k; a rise to 221k had been expected), a 35-week low. And continuing claims, which had risen more sharply than expected in the previous week, pulled back in the Dec 21 week to a 13-week low 1,844k, from 1,896k (rev from 1,910k, a smaller decline to 1,890k had been expected).
- As per usual this time of year, non-seasonally adjusted claims are rising for both initial and continuing, but not quite as dramatically as in prior Decembers.
- In terms of state-by-state dynamics, the drop in California continuing claims stands out (-40.3k on an NSA basis), not unprecedented versus previous years which have been mixed. It's also worth noting that continuing claims in states that were hit by hurricanes Helene and Milton (Florida, Georgia, South Carolina, North Carolina, Tennessee and Virginia) dropped sharply in he Dec 21 week (14.5k, most since Dec 1 2023, and vs a slight rise in the same period last year), which looks to have contributed to a lower national seasonally-adjusted figure.
- Last week it looked from the claims data that the labor market was cooling but not unduly deteriorating, amid lower worker turnover.
- Beyond the week-to-week data, the overall dynamics look even more solid than that: the 4-week initial claims average of 223k is the lowest since June 1, not long before the Fed contemplated kicking off the easing cycle at its July meeting, and while continuing claims are a clearly higher (1,871k 4-week avg vs 1,795k in Jun 1 week), it is still not rising at a rate that suggests a sharp pickup in unemployment.
- In general the data should give the Fed further breathing room to be patient in deciding what to do next on rates. Next Friday's nonfarm payrolls reading will be the key test, however, ahead of the January 29 FOMC decision.
334 words