Merryn's Blog

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.

Subscribe to MoneyWeek

Become a smarter, better informed investor with MoneyWeek.

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.


Source: Bloomberg

Advertisement - Article continues below

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.


Source: Bloomberg

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.

Advertisement - Article continues below

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.




How long can the good times roll?

Despite all the doom and gloom that has dominated our headlines for most of 2019, Britain and most of the rest of the developing world is currently en…
19 Dec 2019
Stock markets

The British equity market is shrinking

British startups are abandoning public stockmarkets and turning to deep-pocketed Silicon Valley venture capitalists for their investment needs.
8 Nov 2019

Why Wall Street has got the US economy wrong again

The hiring slowdown does not signal recession for the US economy. Growth is just moving down a gear, says Brian Pellegrini.
25 Oct 2019
Stock markets

There are lots of reasons to be bearish – but you should stick with the bulls

There are plenty of reasons to be gloomy about the stockmarkets. But the trend remains up, says Dominic Frisby. And you don’t want to bet against the …
17 Jul 2019

Most Popular

Stocks and shares

Do you own shares in Sirius Minerals? Here’s what you need to do now

Mining giant Anglo American has proposed a cash takeover of Yorkshire-based minnow Sirius Minerals. Unhappy shareholders must decide whether to accept…
20 Feb 2020

Gold is at its highest level in years – here’s how to invest

Gold's rise at a time when the dollar is unnervingly strong isn't unheard of – but it is curious. John Stepek explains what's going on, and what it me…
21 Feb 2020
Share tips

Share tips of the week

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
21 Feb 2020

Is 2020 the year for European small-cap stocks?

SPONSORED CONTENT - Ollie Beckett, manager of the TR European Growth Trust, on why he believes European small-cap stocks are performing well.
12 Feb 2019