US initial jobless claims drop – but there’s a snag…
The latest US initial jobless claim figures are out - and the good news is, they're down. So is everything rosy again? Sadly, it's not quite that simple...
We reckon US initial jobless claims are a good indicator of where the US economy and stock market are heading, as we've explained before (see 'More bad news for the markets: US jobless figures are up again').
The latest numbers are just out. They show a 29,000 fall in claims to 429,000.
What's more, the key 4-week moving average has just dropped by 11,250 to 455,250, as the red line on the chart below shows (just to recap, this has been inverted, so a fall in claims pushes the red line further towards the top of the chart and vice versa).
The green line is the S&P 500 index. And the recent rally suggests the stock market has nicely cottoned onto the brighter job scene.
So is everything looking rosy again?
Errno. As so often with government figures, there's a slight snag.
And the chart below shows what it is.
This is the weekly percentage change in continuing jobless claims.
As you can see, it's just jumped a rather nasty 5.6%. That's because Uncle Sam's stattos have re-counted the number of people who are currently getting the dole. And they've found there are almost a quarter of a million more of them than they reckoned before.
This doesn't change our view that the initial claims figure is a good gauge to watch. But it does show that the underlying state of the US job market was quite a bit worse than was widely thought.
In fact, we're not too surprised. John Stepek talked in today's Money Morning about the double dip that the world economy, led by the States, is facing.
And apart from the bigger jobless number, there's been quite a lot more bad news from America out this afternoon. So watch this space - we'll be doing a follow-up blog to round this up later on today.