This week the US weekly jobless claims fell more than expected to 358 000 from 373 000 the previous week. The market was expecting a less favourable outcome of 370 000. The key 4-week moving average of weekly jobless claims fell to 366 000, which is the lowest level since April 2008.
In general, there is a good relationship between weekly jobless claims and the monthly change in non-farm payrolls. In addition, there is obviously an extremely close relationship between changes in non-farm payrolls and economic performance (see our previous research on the correlation between GDP growth and employment).
Some analysts assume that employment is a lagging economic indicator, however, gains in employment tell you a great deal about future growth in income and spending. (US weekly jobless claims are one of the ten indicators used to compile the Conference Board’s US leading economic indicator). Correspondingly, the ongoing improvement in the weekly jobless claims is positive for the employment outlook as well as growth prospects.
In general, the US labour market has shown a clear improvement in the past 6 months (see our most recent US employment monitor). Furthermore, we expect this improvement to continue, albeit at a modest pace, during 2012.
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