U.S. Initial Jobless Claims Fell in the Week Ending February 4, 2012

• Initial claims dropped 15,000 to 358,000 in the week ending February 4, 2012, which was below market expectations for a 370,000 reading, and building on a 6,000 drop to an albeit upwardly revised 373,000 level (was 367,000) the previous week.
• Continuing claims rose 64,000 to 3,515,000 in the week ending January 28, 2012 partially reversing a 116,000 drop the previous week.
• The four-week moving average of initial claims, which better controls for weekly volatility, fell to its lowest level since April 2008, dropping to 366,250 from a revised 377,250 (was 375,750) the previous week.
• Part of the improvement in jobs growth in recent months, particularly the solid 52,000 gain in construction employment in January 2012 and December 2011 combined, may reflect the effect of an unusually warm winter resulting in fewer seasonal layoffs. With that said, while we do not expect job growth to be sustained at quite the solid 243,000 pace in January 2012, the broadly downward trend in initial claims since the summer remains consistent with our view that the underlying trend in labour markets continues to improve.

US initial unemployment insurance claims declined 15,000 to 358,000 in the week ending February 4, 2012, thereby building on a 6,000 drop to an upwardly revised 373,000 level (initially reported as 367,000) the previous week. The level of claims in the latest week was below market expectations for a 370,000 reading. The four-week moving average of initial claims, which better controls for weekly volatility, declined for a fourth consecutive week, falling to 366,250 from 377,250 (was 375,750) the previous week. Continuing claims rose 64,000 in the week ending January 28, 2012, thereby partially retracing the previous week’s 116,000 decline.

The downward drift in the four-week moving average of initial claims from a recent 422,000 peak in August has been reflected in stronger job growth in recent months with solid 243,000 and 203,000 gains in January 2012 and December 2011 payroll employment that were both well above the previous six-month average of 123,000. Part of the improvement in both the claims and jobs data in recent months, particularly the sizeable 52,000 gain in construction jobs in January 2012 and December 2011 combined, may reflect the effect of an unusually warm winter resulting in fewer seasonal layoffs. With that said, while we do not expect job growth to be sustained quite at the pace of the last two months, the encouraging improvement in the initial claims data continues to suggest that the underlying trend in labour markets is improving.