US: Jobless claims would have to rise substantially to signal a recession - TD Securities

"Yet another increase in initial jobless claims has worried some investors. However, on a non-seasonally adjusted basis, claims show no signs of unusual movement," TD Securities analysts argue.

Key quotes

"At 239K, claims remain well below historical levels — even more so if the substantial growth in the labor force is taken into account. Increases like those seen recently are typically reversed unless we are already in a recession."

"Claims would have to rise substantially further to realistically signal that a recession is around the corner. Since 1967, claims have risen to an average of over 330K by the time a recession begins — and peak much higher still, as claims are more a coincident than a leading indicator. The threshold would be even higher if claims are adjusted for growth in the labor force: above 460K."

"Claims are only marginally above their cycle low of 200K observed in mid-January. Historically it takes on average 15 months from the time claims hit bottom until a recession begins, and never fewer than 9 months. We have time."