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Upbeat News for the Labor Market

A bearish aura weighs on US stocks so far for 2016, but today’s numbers on jobless claims offers another dose of upbeat news for the labor market.

 

By James Picerno

In addition, outplacement consultancy Challenger, Gray & Christmas today reports that US employers laid off fewer works last month—the lowest amount, in fact, since 2000. The two releases follow yesterday’s upbeat estimate on private payrolls for December via ADP’s calculations. In other words, the statistical clues seem be lining up for a decent employment report for December in tomorrow’s official estimate from Washington.

As for today’s update on new filings for unemployment benefits, the Labor Department reports that claims fell 10,000 for the week through Jan. 2 to a seasonally adjusted 277,000. The pullback offers some relief after a worrisome run higher in the previous update. Weekly data for this series is noisy, and there’s the added glitch that last week’s numbers may have been skewed by the holiday atmosphere that generally pervades the period between Christmas and New Year’s day. Taking the numbers at face value, however, suggests that the labor market’s near-term outlook for growth still looks healthy. In particular, note the respectable 6.1% year-over-year decline in claims. Until/if we see this annual rate rising on a consistent basis, this leading indicator will continue to provide a degree of confidence for anticipating growth in payrolls.

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It doesn’t hurt to see that Challenger’s monthly data is sending an upbeat message as well. “A strong economy, coupled with what appears to be a growing reluctance to announce layoffs during the holidays, contributed to December experiencing the lowest number of monthly job cuts in more than 15 years,” the firm advised in a press release.

Stephen Stanley, chief economist at Amherst Pierpont Securities, agrees. “The layoffs side of the labor market equation has been unusually favorable for quite some time; there’s no evidence that’s going to change,” he tells Bloomberg. “The labor market is performing well.”

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Hold that thought as we await tomorrow’s Labor Department release on December employment data.