U.S. Initial Jobless Claims Fell in the Week Ending January 28

• Initial claims fell 12,000 to 367,000 in the week ending January 28, 2012 reversing half of the 24,000 jump to a revised 379,000 (was 377,000) level the previous week. Market expectations were for a decline to a 371,000 level in the latest week.
• The four-week moving average of initial claims, which better controls for weekly volatility, dipped for a third consecutive week, falling to 375,750 from a revised 377,750 (was 377,500) the previous week.
• While the initial claims data continued to point to an ongoing underlying improvement in labour markets, employment growth in December 2011 was boosted by an outsized, and likely temporary, jump in hiring of couriers that reportedly reflected rising Christmas sales over the internet. A retracement of this gain in January 2012 is expected to be the main factor contributing to a lower 110,000 gain in overall payroll employment in the month, which would be down from the 200,000 December gain.

US initial unemployment insurance claims fell 12,000 to 367,000 in the week ending January 28, 2012 retracing half of a 24,000 rise to 379,000 reading (initially reported as 377,000) the previous week. The level of claims was slightly below market expectations for a decline to 371,000. At least part of the volatility in claims over the last two weeks could be a result of difficulties seasonally adjusting the data around Martin Luther King Jr. Day. The four-week moving average of initial claims, which better controls for weekly volatility, declined for a third consecutive week, falling to 375,750 from 377,750 (was 377,500) the previous week. Continuing claims fell 130,000 to 3,437,000 in the week ending January 21, 2012 from 3,567,000 the previous week.

While the downward drift in claims in recent months continues to point to an underlying improvement in labour markets, the effect of today's report on expectations for tomorrow's January payroll employment report will likely be limited given that the payroll employment survey was conducted earlier in the month (the payroll survey is conducted in the week containing the twelfth day of the month). The four-week moving average of initial claims was little changed in the January payroll survey week at 379,750 compared to a corresponding reading of 380,750 in December. This would, normally, point to a solid pace of employment growth being maintained in January following a 200,000 gain in December; however, employment in December was boosted by a temporary 42,200 jump in hiring of couriers and messengers reportedly reflecting rising Christmas sales over the internet. A similar-sized decline in hiring in this sector, now that the Christmas shopping period is finished (similar to the hiring pattern in both 2010 and 2009), is expected to be the main factor limiting overall employment growth to a smaller 110,000 gain in January 2012.