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Jobless Claims Fell Last Week, Close To A 5-1/2 Year Low

New filings for unemployment benefits skidded last week by a healthy 24,000, settling at a seasonally adjusted 334,000 through July 13. That leaves new claims near the lowest level in more than five years. The year-over-year decline continues to look encouraging as well, with last week’s unadjusted claims data (before seasonal adjustment) dropping more than 10% vs. the year-earlier level. The main takeaway: the labor market continues to heal and this leading indicator suggests that modest economic growth is still on track for the near term.

The pace of the decline in new claims has more or less flatlined lately, but today’s drop holds out the possibility of new five-year lows in the weeks and months to come. With the exception of yesterday’s weak report on housing starts for June, which looks a bit shaky at the moment, most of the other key economic and financial indicators are still trending positive through last month in a cyclically convincing manner. (For example, see my discussions of this week’s reports on industrial production, retail sales, and the Macro-Markets Risk Index.) Today’s claims update hints at a repeat performance for July for the overall macro profile.

Note that last week’s year-over-year drop in unadjusted claims marks the first back-to-back set of weekly annual declines of 10%-plus in more than a year. Is this a clue that the rate of decrease for new filings is set to accelerate in the weeks ahead?

Reading too much into any one number is always dangerous for deciding where the broad economy is headed. But the claims data is hardly an outlier and so it’s reassuring to see that new jobless filings appear to be trending lower again. That’s a robust signal for thinking that moderate growth is still the path of least resistance.

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