Labor market conditions continue to improve

The labor market is showing enduring signs of improvement. It's not that lots of people are getting hired, however. It's that not many are being fired given the time of year. The top chart shows new, seasonally adjusted claims for unemployment, while the bottom chart shows the raw, nonseasonally adjusted numbers. From the latter, the degree of improvement is noticeable. Currently, layoffs are running only slightly higher than they were at the same time of the year in the growth years of 2004-2007. That suggests that businesses are running a very tight ship, so that any improvement in underlying conditions, coupled with improved confidence in the future, could quickly translate into significant new hiring activity next year. And of course there is that mountain of cash that has accumulated on corporate balance sheets that is just waiting for something to do.