Weekly jobless claims fall to 5-year low, housing markets brighten

posted at 2:41 pm on January 17, 2013 by Ed Morrissey

A few economic indicators out today produced genuine good news, on jobs and the housing market. Have we begun to turn the corner on growth, though, or are we just looking at normal seasonal variations?  It all depends on how one looks at the numbers.

Let’s start with the weekly jobless claims, which fell to a five-year low last week:

In the week ending January 12, the advance figure for seasonally adjusted initial claims was 335,000, a decrease of 37,000 from the previous week’s revised figure of 372,000. The 4-week moving average was 359,250, a decrease of 6,750 from the previous week’s revised average of 366,000.

The advance seasonally adjusted insured unemployment rate was 2.5 percent for the week ending January 5, an increase of 0.1 percentage point from the prior week’s unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending January 5 was 3,214,000, an increase of 87,000 from the preceding week’s revised level of 3,127,000. The 4-week moving average was 3,195,750, a decrease of 6,000 from the preceding week’s revised average of 3,201,750.

That’s a big fall in one week, but it is just one week in a volatile series.  The AP’s analysis points out the deviation from the trend, but also the part played by seasonal adjustments:

The number of Americans seeking unemployment aid fell to a five-year low last week, a hopeful sign the job market is healing. But much of the decline reflects seasonal volatility in the data. …

The four-week average, a less volatile measure, fell to 359,250.

The applications data can be uneven in January. Job cuts typically spike in the second week of the month as retailers, restaurants and other companies lay off temporary workers hired for the winter holidays.

Last week, the layoffs weren’t as large as expected, a department spokesman said. That caused a steep drop in the seasonally adjusted data.

The unadjusted data looks less sunny:

The advance number of actual initial claims under state programs, unadjusted, totaled 555,708 in the week ending January 12, an increase of 2,360 from the previous week. There were 525,422 initial claims in the comparable week in 2012.

That tends to bolster the contention that this is an artifact of seasonal adjustment, although to be fair we routinely compare the adjusted numbers.  On that basis, the analysis I produced a couple of years ago showed that the 325K level tended to be the highest level correlated to actual and significant job growth, and this is the first time we’ve even been close to that since the financial crisis of 2008.  That has to be sustained, and it’s correlative rather than causal, of course — but anyreal shift in the right direction is good news.  We’ll have to see whether this is an outlier on the data line or a trend over the next several weeks.

In the housing market, the US got two pieces of good news.  First, housings starts went up by more than 12% in December, showing real life in residential construction at the end of the year:

In another piece of good economic news, home construction surged 12.1 percent in December to end best year since 2008. …

Groundbreaking to build new U.S. homes accelerated in December to its fastest pace in over four years, supporting the view that housing is poised to provide a substantial boost to the U.S. economy.

The Commerce Department said that starts at building sites for homes surged 12.1 percent last month to a 954,000-unit annual rate.

Data for U.S. housing starts can be volatile and is sometimes subject to large revisions. The government revised downward its estimate for November housing starts to a 851,000-unit rate from the originally reported 861,000.

Some of the strength in December’s reading for starts came from a 20.3 percent surge in multi-family unit construction. That component is especially volatile.

Zero Hedge notes that there is considerable swings in seasonal adjustments in this data series, but the trend has been mostly positive in 2012.  At the same time, and probably not unrelated, new foreclosures dropped to a post-crisis low in December, too, although that news was also tempered somewhat:

Foreclosure activity in the United States was at a near six-year low in December and declined over the entire year as the housing market continues to recover after foreclosures peaked two years ago.

But a build-up in backlogs, brought about in part by tougher rules for lenders to foreclose, could see new spikes in foreclosure activity this year, according to a report by RealtyTrac released on Thursday. …

There were about 2.3 million foreclosure filings on 1.8 million properties in 2012. That represents a decline of 3 percent on the year before and a drop 36 percent on a peak of 2.9 million properties in 2010.

Foreclosure activity was at 68-month low in December, falling 10 percent from the previous month and 21 percent from the same time a year ago.

The settlement of the robo-signing scandal allowed lenders to clear their books in 2012, and this has allowed the housing markets to return to normal valuation mechanisms.  Prices rose, showing more stability for home owners and investors, and absent more market-distorting interventions, we should see this sector return to normal, inflation-linked growth over the next several years.

The only real cloud on the horizon today came from the Fed rating on mid-Atlantic business activity:

A key index measuring business activity in the Mid-Atlantic declined in January, coming in at negative 5.8 percent. Economists polled by Reuters had predicted that the Philadelphia Fed index would tick higher from last month. They forecast the rise in new orders increased in January to give a reading of 5.8, up from 4.6 in December.

Most expect the 2012Q4 GDP to come in pretty low later this month.  Perhaps that slow growth will continue into 2013Q1.  If so, don’t expect that weekly jobless claim series to stay in the 335K range for long.


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Comments

Which is why the administration wanted to inundate the networks with the gun control topic before such good news.

rogerb on January 17, 2013 at 2:44 PM

Uneducated guess:
Hiring is to enable 3 part-timers versus 2 full-timers?

tomg51 on January 17, 2013 at 2:45 PM

Ha!

Bmore on January 17, 2013 at 2:46 PM

How come seasonally-adjusted data is always better than unadjusted, 12 months in a year?

Archivarix on January 17, 2013 at 2:48 PM

all this will get readjusted in a couple of weeks with much worse numbers and no coverage

DanMan on January 17, 2013 at 2:50 PM

Sorry, I just do not believe anything that has to do with numbers that comes out of dc. It seems they always make the numbers look good for bho? And in a month or so, they get revised up?
L

letget on January 17, 2013 at 2:52 PM

Yawn, whatever.

sauldalinsky on January 17, 2013 at 2:56 PM

“Good news” is the economy sucking a tiny bit less than it has been?

Guess the definition of good news has changed.

Rebar on January 17, 2013 at 2:59 PM

This topic is going to be like a dog whistle for all the trolls to start showing up to gloat about how “brave and brilliant” their Lord and Master is.

UltimateBob on January 17, 2013 at 3:00 PM

So HOW many people are unemployed as of now ?
Just in absolute plain numbers, not percentages, not rates of numbers, just HOW MANY ???????

burrata on January 17, 2013 at 3:04 PM

Hiring is to enable 3 part-timers versus 2 full-timers?

tomg51 on January 17, 2013 at 2:45 PM

Same pie, more slices…..yyaaaaayyyy :O

burrata on January 17, 2013 at 3:07 PM

“Good news” is the economy sucking a tiny bit less than it has been?

Guess the definition of good news has changed.

Rebar on January 17, 2013 at 2:59 PM

Welcome to the new “normal.”

UltimateBob on January 17, 2013 at 3:08 PM

Data such as this indicates that increased effort on the part of the administration is required to further depress and contract the economy, which fully explains the need to raise taxes and borrow more money from the Chinese.

BobMbx on January 17, 2013 at 3:09 PM

Two words…Superstorm Sandy. Housing and construction is UP…duh. Not that this impresses me as to the overall picture. I just know construction workers at the Jersey shore are jumping for joy.

NJ Red on January 17, 2013 at 3:12 PM

Here’s a question. With the implementation of Obamacare, and the recent announcements of many employers that employee hours are being cut below sometimes across the board, i.e., both part time and full time, how will that show up in employment statistics and how long will it take for that to wend it’s way through the system affecting such things as housing prices and starts? Will that even be track-able, or will we just see more anemic growth?

Dusty on January 17, 2013 at 3:14 PM

If it was good there would be:

* No need for QE
* No need to have ZIRP
* No expansion of FHA (or bailout)
* No need to have banks withhold inventory.

Don’t piss on my leg and say it’s raining.

Oil Can on January 17, 2013 at 3:17 PM

…WE’RE NUMB BY NOW!

KOOLAID2 on January 17, 2013 at 3:17 PM

Don’t piss on my leg and say it’s raining.

Oil Can on January 17, 2013 at 3:17 PM

…they have prostate problems!

KOOLAID2 on January 17, 2013 at 3:19 PM

In another piece of good economic news, home construction surged 12.1 percent in December to end best year since 2008. …

IIUC, there is a huge inventory of UNSOLD
( new as well as pre-owned) homes, currently sitting in the market. To this number , add the number of potential foreclosures which will further increase that inventory in the next few months.
So the question is :
WHY are builders constructing even more new houses ?
Maybe they know something that we all don’t know . Yet.
Hmmmm…..

burrata on January 17, 2013 at 3:19 PM

This thread ain’t going anywhere. Anybody heard from Hillary regarding Algeria and Mali?

DanMan on January 17, 2013 at 3:20 PM

This thread ain’t going anywhere. Anybody heard from Hillary regarding Algeria and Mali?

DanMan on January 17, 2013 at 3:20 PM

Are those the other two wives husbands mentioned by Bill?

Oil Can on January 17, 2013 at 3:24 PM

Why must Ed always couch this crapola in neutral tones, pretending there are no nistorical trends or momentum? It’s a form of journalistic malpractice / malfeasance. He probably thinks he’s being ‘non biased’, instead of context-absent.

rayra on January 17, 2013 at 3:26 PM

The economy is not in total destruction for the simple reasons:

The Federal reserve is printing trillions of dollars to pay government debt and bills…
The Federal reserve is allowing banks to borrow the printed money for free…
Wall Street (dominated by Limousine liberals) love the free money printed by the goverment because it is allowing them to make profits like never before, in fact they are the biggest profiteers by far from the Obama Presidency and hence they are faking the facade of good markets (DOW, S&P, NASDAQ)… Although Wall Street and the “Real Economy” have not been connected for the last 20 years…

The question is how long they can keep doing it and at what point the Federal Reserve can print more money without causing absolute and total collapse of the economy… Is it 10 trillions dollars, 20 trillions, 100 trillions?…

mnjg on January 17, 2013 at 3:34 PM

Which is why the administration wanted to inundate the networks with the gun control topic before such good news.

rogerb on January 17, 2013 at 2:44 PM

..which is why they were really stupid. The issue was significant to approximately 2-4% percent of the people (Gallup poll in the wake of Newtown) and their hectoring and limp-dick EO measures have succeeded in spinning a record 3 million more guns into law-abiding Americans’ hands over the last two months.

Molon Labe takes on a whole new meaning, don’t it?

The War Planner on January 17, 2013 at 3:34 PM

Have we begun to turn the corner on growth, though, or are we just looking at normal seasonal variations?

Neither: Cheap money, FHA guarantees, and adjusting to Obama’s New Economic Order, add up to economic activity.

PattyJ on January 17, 2013 at 4:20 PM

That tends to bolster the contention that this is an artifact of seasonal adjustment, although to be fair we routinely compare the adjusted numbers. On that basis, the analysis I produced a couple of years ago showed that the 325K level tended to be the highest level correlated to actual and significant job growth, and this is the first time we’ve even been close to that since the financial crisis of 2008.

Ed! jeepers. 555,000 people filed for unemployment last week and 520k the week before that are you seriously buying that “seasonal adjustment” CRAP? Over a million people filed for unemployment. No amount of malarky with the numbers is gonna change that and you know too that if we had a Republican in the white house the media would be screaming that to the heavens.

dogsoldier on January 17, 2013 at 4:26 PM

So HOW many people are unemployed as of now ?
Just in absolute plain numbers, not percentages, not rates of numbers, just HOW MANY ???????

burrata on January 17, 2013 at 3:04 PM

You want reality or the official bull excrement?

Last I checked 89 million were no longer in the workforce. I estimate that over 90 now. A year ago people were throwing around the number 23 million unemployed and looking, in reality it was close to 30. I now estimate it over 30. Average stay on unemployment is over six months. We’ve added one million unadjusted actual real people to the rolls since January 1.

dogsoldier on January 17, 2013 at 4:32 PM

The housing market is not coming back. There are a lot of homes still up for sale after months of being on the market.

There are a lot of “housing starts” in the suburbs W / SW of the Twin Cities metro area, but that is all that they are: housing starts. They’ve been started, but not finished and no one living in them.

Mirimichi on January 17, 2013 at 5:57 PM

Meaningless…twitches of the dying.

Mimzey on January 17, 2013 at 5:57 PM

The 4-week average is still around 360K and there will not be much excitement until it goes below 350K, but in general these numbers are going in the right direction and are good news … Housing clearly bottomed last year after the foreclosure logjam was broken, and has been coming back for some time. Builder confidence continues to be high, and growing consensus that housing may take the lead in the recovery this year … December retail sales also came in stronger than expected this week, and it may be that 4Q12 GDP will not be as light as first feared after all. We’ll see soon … Meanwhile, the markets continue to climb. SP500 at a 5-year high, Dow topping 13,500 as the bulls get ready to charge. More turbulence ahead as the politicians do their dances, but after that … look out …

TouchdownBuddha on January 17, 2013 at 6:09 PM

That tends to bolster the contention that this is an artifact of seasonal adjustment, although to be fair we routinely compare the adjusted numbers.

Mostly because seasonal adjustments, properly applied, allow for comparison between different weeks (or months in a monthly series of statistics). When comparing the same week (or month) in different years, the unseasoned numbers are generally the ones to use, especially in a week that does not have a holiday or a month change affecting it like this past week.

Steve Eggleston on January 17, 2013 at 6:47 PM

Books are cooked; doesn’t matter anymore. No matter what the numbers really are, Barky and Co. will juice them somehow. They will never reflect that we will become Part-Time Nation by the end of the year (if we have jobs).

Philly on January 17, 2013 at 7:06 PM

As for the housing starts, it’s a lot less impessive than it seems. While it is the best December since 2007, prior to that, it is significantly weaker than the weakest December between 1993 and 2006. Indeed, other than recessionary periods, there wasn’t a December this weak going all the way back to 1959, the first year the Census Bureau kept this statistic.

Moreover, the 2012 total housing starts of 780,000, while easily the best of the Obama regime, is not only well behind 2008′s 906,000 starts, it is 234,000 lower than the weakest year between 1959 and 2007 – 1991′s 1,014,000.

In short, if there’s a housing “comeback”, it’s to a level far lower than we’ve had in modern history.

Steve Eggleston on January 17, 2013 at 7:08 PM

market-ticker.org/akcs-www?post=216241

The diffusion index, if you remember, was positive last month. I was guardeded optimistic that we might have seen at least somewhat of a local bottom. Nope. It’s -5.8 this month.

We have a serious problem here; New Orders collapsed to -4.3 from 4.9. Shipments went flat and the rest of the internals look like crap as well.

Probably most important to the economy, both employees (-5.2 from -0.2) and workweek (-8.3 from 0.4) went strongly negative.

This is a crap report. The six month forward expectations are somewhere north of fantasy land, with the biggest surprises being in new orders, shipments and prices received and paid, all of which are ridiculously above current levels.

In addition note that the “fiscal policy developments” (a special question in this survey) were cited as reducing hiring plans by 37% of the respondents, with 49.3% saying it made no change.

We are back to sucksville for January folks; Richmond ought to be very interesting.

Obama sucks.

tom daschle concerned on January 17, 2013 at 8:20 PM

This says it all on the state of the economy…

Does this look like a recovery?

voiceofreason on January 17, 2013 at 9:36 PM

Florida alone is losing 2000 jobs because a grocery store chain is closing 33 of their stores.

In fact, nationwide there are dozens of stores from small family businesses to some major chains shutting down. And then there’s all the layoffs.

Heck, even Cirque du Soleil is axing 400 employees.

Dr. ZhivBlago on January 17, 2013 at 9:42 PM

Ya’ really think this is good news? When companies are down to the bare minimum of employees that they need to stay in business then there’s no more to layoff until they get down to having to close the business.

stukinIL4now on January 17, 2013 at 10:09 PM

I can’t help but envision all of these sickly looking people striking out headlines and recording their changes in their tiny little cubicles inside the Ministry of Truth.

Greenshield on January 18, 2013 at 8:59 AM