US Unemployment Claims Drop, Market Optimism Grows

James Hyerczyk
Updated: Feb 8, 2024, 15:55 GMT+00:00

Unemployment claims fall, insured rate drops to 1.2%, but rising moving averages reveal labor market complexity, impacting investor sentiment.

US Initial Jobless Claims

Key Points

  • Initial unemployment claims decrease to 218,000.
  • Insured unemployment rate falls to 1.2 percent.
  • Rising moving averages suggest cautious market optimism.

Initial Claims Decrease

In the latest week, the number of Americans filing for unemployment insurance showed a notable decrease. The advance figure for seasonally adjusted initial claims fell to 218,000, dropping by 9,000 from the previous week’s revised level. This decline marks a significant shift from the earlier reported figure, which had been adjusted upward from 224,000 to 227,000.

Moving Average Shows Increase

Despite the drop in initial claims, the 4-week moving average, which smooths out week-to-week volatility, climbed to 212,250. This represents an increase of 3,750 from the previous week’s revised average, which itself was revised upward by 750 from 207,750 to 208,500.

Insured Unemployment Rate Dips

There was a decrease in the insured unemployment rate for the week ending January 27, settling at 1.2 percent. This figure represents a 0.1 percentage point drop from the previous week’s unrevised rate. The advance number for seasonally adjusted insured unemployment during the same week was 1,871,000, a decrease of 23,000 from the prior week’s revised level.

Four-Week Average for Insured Unemployment Rises

The 4-week moving average for insured unemployment reached 1,849,750, an increase of 9,500 from the previous week’s revised average. In a revision, the prior week’s average was lowered by 1,000 from 1,841,250 to 1,840,250.

Short-Term Market Forecast

The latest unemployment data presents a mixed picture for the markets. The decrease in initial unemployment claims and the dip in the insured unemployment rate are positive signals, suggesting resilience in the labor market.

However, the increases in the 4-week moving averages for both initial claims and insured unemployment inject a note of caution. In the short term, these contrasting trends could lead to cautious optimism among traders. The overall labor market strength, indicated by the lower unemployment rates, supports a bullish outlook for the market, yet the rising moving averages warrant close monitoring for any signs of weakening labor market conditions.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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