Initial jobless claims fell 3k w/o/w to 183k and that was 12k less than estimated. This brings the 4 week average to 192k from 198k and that is the least since May. Continuing claims fell to 1.66mm from 1.67mm in the week before but still well above low of 1.3mm last May.
The bottom line is the same with the modest pace of firings, and for those that are losing their jobs they are quickly finding a new one or getting a severance, and the slowing rate of hiring’s reflected in the relatively elevated level of continuing claims.
We’ll see how long this low level of initial claims last though. Challenger Gray today said “US based employers announced 102,943 cuts in January, a 136% increase from the 43,651 cuts announced in December.” That is “the highest January total since 2009.” Their bottom line, “We’re now on the other side of the hiring frenzy of the pandemic years. Companies are preparing for an economic slowdown, cutting workers and slowing hiring.”
4 Week avg in Initial Claims
Continuing Claims
Productivity in Q4 was better than expected with a 3% q/o/q annualized gain vs the forecast of 2.4%. This helped to lower unit labor costs. I like to look at this data though y/o/y and productivity fell by 1.5% and that marks every quarter of 2022 with negative productivity. Unit labor costs rose 4.5% y/o/y with the full yr averaging 5.8%, a clearly higher trend.
Productivity y/o/y
Finally, European bonds are ripping higher with yields falling sharply as there was no surprise from Lagarde and QT will still start pretty modestly at just 15b euros per month initially. This gets to their problem, same with the Fed, the ECB is tightening as markets are easing. The euro is down a touch after the recent jump to near $1.10. The ECB will hike another 50 bps at the next meeting and Lagarde for now is committed to keeping rates higher for longer.