U.S. Initial Claims remain inflated by weather, but February payroll likely to be weaker than January's
Initial claims at 227k are down from 232k but still higher than expected and higher than the seven preceding weeks. We suspect weather is playing a part in the recent upturn in initial claims, though the data suggests that February’s payroll will not be as strong as January’s.
The 4-week average hit a low of 204k in the survey week for January’s payroll, down from 217.5k in December’s but is now back up to 219.5k, the highest since November. The survey week for February’s payroll comes next week.
Weather is starting to normalize after a recent extended exceptionally cold spell over much of the country which may see claims slipping further in the coming weeks. Still, the 4- week average is likely to be significantly higher in February’s payroll survey week than in January’s.
Continued claims cover the week before initial claims and this week’s outcome is also higher than expected, at 1.862m from 1.841m, though here the 4-week average is still falling, reaching its lowest level since October 2024. The recent gains in initial claims are not a strong signal of labor market weakness.
