Jobless Claims Show Slight Jump

Jobless claims rose slightly last week, but the generally declining trend is still bubbling. New filings for unemployment benefits increased 4,000 to a seasonally adjusted 367,000 for the final week of September. More importantly, the large drop reported a week ago is holding up and claims continue to drop each week relative to year-earlier levels.

Claims aren't making much progress on a week-to-week or even a month-to-month basis, but the numbers aren't rising either. The worst you can say about this leading indicator is that it's stuck in neutral. That's not helpful in the sense that it suggests that the labor market's growth will remain sluggish. At the same time, the fact that claims aren't persistently rising implies that economic growth, slow as it is, will struggle on.

Claims data is especially noisy in the short term and so it's helpful to consider the year-over-year changes for a clearer profile. On that front, more of the same prevails, and that's a good thing, namely: claims continue to decline at roughly a 10% annual pace (in raw terms before seasonal adjustment). That's been an encouraging sign all along and it continues to be a bright spot that sends a strong message that jobs growth is still with us, and probably will be for the near term. When new claims start rising relative to year-earlier levels, we'll have a serious problem. But we're a long way from such a dark state of affairs, which is the main reason why this indicator overall continues to support the case for expecting growth rather than recession.

With today's claims report we now have a full set of numbers for September with this series. Although revisions may change the analysis at some point, the full month of claims at the moment provides us with another data point that brings mildly encouraging support for September's economic profile. Based on monthly calculations, jobless claims last month dropped 9% vs. September 2011. In other words, more of the same.

There are still many September economic reports to come, but so far, so good. The productive tally on monthly claims numbers follows yesterday's upbeat news on last month's activity in the services sector, manufacturing and employment (via ADP).

Will tomorrow's employment report for September from the Labor Department close out the week on a high note? Briefing.com reports that the consensus forecast among economists for private payrolls in tomorrow's release sees a gain of 130,000 jobs for September, a bit higher than August's 103,000 advance. That's hardly impressive, but if it's accurate it would keep hope alive that slow growth rather than recession is still the path of least resistance.

“We’re not going anywhere quickly in the jobs market,” Ryan Sweet, senior economist at Moody’s Analytics, tells Bloomberg. “The job market is just more of the same. Layoffs aren’t the big problem, it’s the lack of hiring.”

That's not good enough to inspire forecasts for stronger growth, but it's not obvious that there's enough weakness to push the economy over the cyclical cliff either.