It would be nice if it was good news, but it's not. U.S. jobless claims fell last week, but not because the economy is looking any better.
According to the U.S. Labor Department, the number of people claiming jobless benefits for the first time hit a level of 468,000 in the week ending October 6th. That's a 67,000 dip from the week before and well below expectations of 510,000 claims.
But you have to put the numbers in perspective.
First, there is reason to believe that a "quirk" in seasonal adjustment is making last week's numbers look artificially low. Statisticians routinely adjust data to make readings comparable from week to week. For example, every year there is a lull in the number of people claiming benefits in the week between Christmas and New Year's. To offset that distortion, the numbers are adjusted up so they can be compared with other weeks.
What happened last week, apparently, is that the adjustment was not appropriate to the seasonal pattern. Which means the number should have been higher.
Second, the week to week numbers are not a good indicator anyone. You really have to watch the four-week moving average.
And if you have been watching that one, you would have seen it go up. And up, and up and up.
The average number of first-time claims over the past four-weeks is 463,000. That is the highest since December of 1991. Eighteen months ago, that one was hovering around 250,000.
And of course, there is more bad news to come.
Since Sept. 11, more than 350 U.S. companies have issued profit warnings. Week after week, their profit problems get translated into pink slips. Which means that spending power is getting hit and the unemployment rate is likely to rise. Breaking the cycle will take time.
Even so, the markets seem ready to look on the bright side, however briefly.
On Wednesday the equities markets soared (well, "soared" on a relative basis anyway) on some positive news on U.S. military strikes. That sent bond yields up a little, particularly at the short end of the yield curve. With Thursday's better-than-expected economic reading, yields continue to climb and prices to fall.
Minds could be changed Friday, though.
That's when we get a slew of economic data, including a reading on September retail sales.
Stay tuned.
Linda Nazareth is ROBTv's resident economist.