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Takeaway: The labor market is strengthening. This is both causing, and being caused, by housing's rally.

 Labor Market Strength Shows No Signs of Deterioration

The optical or seasonally adjusted jobless claims number was slightly better than expected in spite of rising nominal week-on-week numbers. Initial jobless claims this week rose 2,000 to 336,000 this week.

Our focus is on the trends in the non-seasonally adjusted (NSA) data, where we saw further acceleration in improvement in the latest week. This past week, the rolling NSA initial jobless claims improved by -7.5% year-on-year as compared with improvement of -5.6% in the previous week.

What this signals is that the real labor market is experiencing accelerating improvement, and this has been the case for the last six weeks. Refer to the char below for additional perspective.

Jobless Claims: Full Steam Ahead - march21jobless

We think it's also worth noting that the trajectory of 2013 is now mirroring 2012 with a nearly identical slope. This is the strongest leading indicator for housing trends, lender credit quality trends and loan growth trends. Moreover, it raises expectations of the Fed backing off, which pushes the long end higher, alleviating pressure on margins.