- Prior was 214K (revised to 215K)
- Continuing claims 1.866M vs 1.923M prior
The claims numbers over the holidays are highly volatile and subject to large seasonal revisions so they're poor numbers to index from.
The drop over a number of weeks is notable though and is tracking towards the bottom end of this range again. Next week's data will also be highly-subject to holiday seasonality but in early January, watch the numbers.
The US government shutdown made this a tough report to read through but it's tough to see where the Federal Reserve is seeing weakening in the US jobs market based on this chart. Some policymakers argue it's a 'low higher, low firing' economy and that there is some evidence for that but the 'low firing part' seems to be the most definitive, as shown in claims.
For some background, weekly initial jobless claims are released every Thursday at 8:30 am ET by the Department of Labor. They track how many Americans filed for unemployment benefits for the first time. Bill Gross said that if he only had one economic indicator, this would be it as it's the ultimate "high-frequency" pulse check on the US economy. While the monthly Non-Farm Payrolls gets the glory, jobless claims provide a real-time leading indicator.
That said, there is a high 'noise to signal' ratio in the report as holidays and other special factors can cause large weekly distortions. That's why many market watchers prefer to look at four-week moving averages in the report. However when you do that, you tend to end up with the same lags as non-farm payrolls.
So overall, this report is one piece of the puzzle and one that should be watched carefully but taken with a grain of salt, especially around holidays.
In terms of market reaction, USD/JPY is quickly up about 10 pips on the data, an indication the market thinks that this will make the Fed slightly less likely to cut rates further.
