LIVE MARKETS-Pop the cork: Jobless claims drop amid seasonal volatility

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POP THE CORK: JOBLESS CLAIMS DROP AMID SEASONAL VOLATILITY

Investors were treated to one final economic indicator for the year on Wednesday, in the form of the Labor Department's weekly jobless claims report.

Last week, 199,000 U.S. workers joined the queue outside the unemployment office USJOB=ECI, marking an unexpected 7.4% drop from the previous week's 215,000.

Analysts expected a slight increase.

Were employers reticent to hand out pink slips for Christmas?

Ironing out weekly volatility, the four-week moving average of initial claims is still moving sideways, with a slight downward bias and within the range associated with healthy labor market churn.

A recent uptick in corporate layoff announcements has yet to meaningfully impact the claims data.

So what does current labor market data imply for Fed policy in the year ahead?

"The labor market has obviously weakened a touch, but the starting place matters," says Scott Ladner, chief investment officer at Horizon. "The starting place was the strongest labor market we've seen in any of our adult lifetimes."

Ongoing jobless claims USJOBN=ECI, which are reported on a one-week lag, decreased by 2.5% to 1.866 million. This metric remains elevated, coming at a time of weak hiring and consumer survey data that suggests laid-off workers are finding it increasingly difficult to find a replacement gig.

(Stephen Culp)

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