Initial Jobless Claims Fall by 12,000 (week ending January 28, 2012) – Continuing Claims Drop by 130,000:

The jobs market data this week is important but may not change many minds in either direction.

U.S. initial unemployment insurance claims fell for the week ending January 28, 2012.  Jobless claims fell by 12,000 to 376,000 and took back half of the gains in jobless claims from last week which was revised to 377,000.  Jobless claims beat some economist’s expectations and we believe this number is noisy but confirms the general trend downward.  The adjusted moving average for jobless claims crept down to 375,750 from 377,750 the previous week.

Continuing Claims Still Falling

Continuing claims fell 130,000 to 3,437,000 for the prior week – the fewest since 2008.  This is more evidence that workers are actually joining the labor force and people are not relying on benefits as much as they used to.  Claims for unemployment benefits have been trending downward but the impact of changes in January haven’t led to more economists changing their tune about the health of the U.S. economy because the numbers weren’t exceptional.  Tomorrow, the U.S. government will report more economic data on the strength of the jobs market and today’s data was in line with ADP figures released yesterday that showed the jobs market picking up steam in the private sector.  The decreases in unemployment, rising consumer incomes and low bond yields are three reasons the market has been moving up recently breaking new ground.  Unless tomorrow’s employment numbers show a sharp reversal – we would continue to look at small caps and technology for leadership.