Jobless Claims: Surprise Decline, Trend Still Higher

Bottom Line: Claims unexpectedly fell last week as tallies in California and New York dropped. These states had been reporting steady increases, which suggests the latest readings could be only a temporary reprieve from the renewed uptrend in claims. New shutdowns for the virus and continued uncertainty around new fiscal stimulus plans have added uncertainty to the labor market outlook. Coming into a period of high volatility due to difficult seasonal adjustments, the medium-term trend is still higher with the 4-week average holding over the 13-week average. Our Nowcasting model suggests claims increased again this week, suggesting claims could come in over one million again, sharply above the 869k unadjusted claims reported for last week. Jobless Claims FELL by 89k during the week ended December 19th to 803k, compared with market expectations for a decline to 880k. The 4-week average ROSE by 4.0k to 818k and the 13 week average FELL by 5.4k to 791k. Continuing Claims FELL by 170k during the week ended December 12nd to 5,337k, after the prior week was revised moderately lower from 13,385k to 5,507k.The 4-week average FELL by 188k to 5,538k. On a non-seasonally adjusted basis, Continuing Claims FELL by 48k to 5,444k during the week ended December 5th. The Insured Jobless Rate FELL by 0.2% to 3.6% during the week ended December 12nd. The insured jobless rate only reflects the number of people collecting regular state unemployment insurance.