Announced this morning, Initial Jobless Claims were 223,000 for the week ending Jan 18th, slightly higher than expected and 6,000 more than the previous week. In addition, Continuing Claims were 1,899,000 for the week ending Jan 11th, also higher than expected and 46,000 more than the previous week’s revised figure.
Initial claims were slightly more than expected and above the previous week, with only a minimal effect from California which has been impacted by the multiple wildfires. Despite the slight increase initial claims are still well below 300,000 which many consider to be the high threshold for initial claims in a healthy economy. Meanwhile, continuing claims were more than expected and higher than the previous week, suggesting it is becoming more difficult for out-of-work individuals to find a job.
Overall, the labor market is still intact albeit softer than it was in previous months given the increase in continuing claims. As long as people are working, they tend to spend money, and they support the US economy given its nearly 70% weighting in consumption. The continued strength of the labor market will be a key factor for Federal Reserve policy and the markets as we work through earnings season in the coming weeks.
In all, the yield on the 10-year US treasury initially ticks slightly lower following the report and equity futures are mixed as we head into the market open.
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