This morning's release of weekly initial jobless claims showed a smaller than expected decline from last week's level of 531K. Although the smaller than expected decline was somewhat of a disappointment, the trend remains down. The four-week average of weekly claims has now declined for eight straight weeks and remains in a steady downtrend since its highs in March. In fact, the most recent reading is the lowest level since the second week of January.
The real test for this indicator will come in the weeks ahead. As shown below, in calculating the four-week average, next week's calculation will drop a level of 524K, so in order for this indicator to decline again next week, we will need to see an initial claims reading below 524K.
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