Want a quick pre-Jobs Report read-through on the U.S. economy? Initial claims, the number of people filing for state benefits, just hit the lowest level in decades. Put another way, the U.S. labor market looks pretty healthy.
Below is analysis from Hedgeye U.S. Macro analyst Christian Drake in today's Early Look:
- "Initial Claims printed 233K during the May employment survey week, the lowest level in decades. So, the separations side of the employment equation is as supportive of net hiring as it’s ever been.
- As can be seen in the Chart of the Day below, from a cycle perspective, Initial Jobless Claims have been the most consistent, lead labor market indicator for the economic cycle. While total employment peaks coincident to the end of the cycle (which, of course, is not surprising – how do you think economists retrospectively pick when the cycle peaked/recession started?), peak improvement in initial claims occurs ~7 months ahead of the economic cycle peak. As it stands, we’re still putting in the trough in Initial Claims."
