Labor Market Weakening

Initial jobless claims for two weeks ago were revised higher to a newtwo year high of 357k, but fell 21k last week to a lower level thananticipated of 336k (consensus 345k). Continuing claims continue torise, increasing to the highest level since the autumn of 2005, at2.76 million (+46k week over week). The unemployment rate for workerseligible for unemployment benefits rose from 2 to 2.1%. The claimsdata is pointing to a slowing job market as the economy cools.
The ADP estimate for job growth in December rose 40k, excludinggovernment workers. This was slightly better than the 33k consensusestimate. Non-farm payroll growth for tomorrow is estimated to show70k net new jobs created in December. The unemployment rate isexpected to tick up to 4.8% from 4.7%.
Earlier this morning, the Challenger report showed job cuts falling-19% YoY in 2007, and layoffs falling -8.5% YoY, indicating companieshave held on to skilled workers as the economy slows. 2007 saw thenumber of total job cuts fall to the lowest level since 2000, butfinancial firms tripled job cuts to 150k in 2007, versus only 50k in2006, as the mortgage market fallout impacted bank and investmentfirms adversely.