US Initial Jobless claims: Volatility is not a trend

• First time filings expected to increase to 835,000 after 803,000.
• Continuing claims predicted to rise to 5.433 million from 5.337 million.
• Forecasts have been erratic for the past two months.
• Currency markets can be volatile in the final weeks of the year.

Initial jobless claims are expected to continue their recent cycling between between surprise gains and losses. Requests for unemployment benefits are forecast to rise to 835,000 on December 25, two weeks after the highest total since early September and one week after the lowest filings this month.

Continuing claims are projected to reach 5.433 million in the December 18 week, after falling to 5.337 million the lowest of the pandemic era the previous week.

Claims and forecasts

Forecasts for initial claims ave been unusually erratic for the past two months.

After jobless claims dropped to 711,000 in the week of November 6, the lowest of the pandemic on a forecast of 735,000, from 757,000 prior, the difficulties began.

Improvement was predicted to continue in the November 13 week with a forecast of 707,000, instead claims rose to 748,000. The following week, November 20, the prediction was 730,000, the result was 787,000. In the final week of the month, November 27, the process reversed, forecast 775,000, reality 716,000.

December was more of the same: First week 725,000 expectation, 862,000 result; second week 800,000 forecast, 892,000 figure, third week 885,000 projection, 803,000 number.

Initial Jobless claims

Forecasts and closures

Predictions have become less accurate since a number of Democratic run states, notably California, New York and Pennsylvania instituted tighter economic and social restrictions in November and December in response to a rise in COVID-19 positive tests.

Other large states, Republican run Texas and Florida for example, remain almost fully open, with generally better case and hospitalization rates.

The problem for the statisticians is that the new rules are widespread enough to create a temporary surge in claims without affecting unemployment trends nationwide.

For instance, on December 11 Governor Andrew Cuomo of New York, banned indoor dining in New York City, once again limiing restaurants to take-out service. In early December, Governor Tom Wolf of Pennsylvania restricted operation of restaurants statewide. California has been attempting to enforce some of the strictest travel, business and socialization rules in the country with poor results. Its case rates remains the highest per population in the nation.

These measures have once more thrown restaurant employees onto the unemployment rolls, while leaving the general population of workers, where slow improvement continues, unmarked.

Conclusion

Initial Jobless claims in the US have been the pandemic's telltale. They signaled the abrupt shift to catastrophe in March and have been monitored ever since for the recovery. The recent volatility in filing is directly tied to the newly imposed restrictions in a few states. It does not represent a national trend.

As such the potential variation in the weekly numbers, will, barring a huge disparity, have little impact on the currency markets, even in their end of year liquidity desert.