Labour Market Momentum Signal

Signal Summary:

• The Labour Market Momentum signal is currently in a Neutral regime as of 2025-12-31, with a composite Z-score of -0.05.
• This indicates stable labour market conditions, consistent with trend growth, showing no strong expansion or contraction.
• Conviction Band: Medium | Interpretation Confidence: High Confidence | Internal Conflict Flag: No.

Key Dynamics:

• The composite's near-zero value is driven by inverted Z-scores of Initial Claims YoY (-0.14) and Continuing Claims YoY (-0.04), alongside the Z-score of Nonfarm Payrolls 3-month difference (0.01) (1).
• Momentum is stabilised, indicating neither significant tightening nor softening in the labour market.
• Conditional Invalidation: The `Labor_Momentum` Z-score consistently exceeding +0.75 (Tightening) or falling below -0.75 (Softening) would reverse the interpretation (1).

Scenario Balance:

• Base Case dominant: Continued Neutral labour market conditions, supported by current indicators remaining within established thresholds.
• Upside secondary: A sustained acceleration in payrolls and sharp decline in jobless claims, pushing `Labor_Momentum` above +0.75.
• Downside residual: A notable increase in jobless claims and deceleration in payrolls, causing `Labor_Momentum` to drop below -0.75.

Time Horizon & Aggregation:

• Time Horizon: Cyclical (months), given the use of monthly data and 3-month differences for capturing momentum shifts.
• Aggregation Weight Hint: Medium, reflecting the signal's high confidence in its neutral assessment, yet lacking strong directional conviction.

Macro Relevance:

• This signal primarily informs the Labour market dimension, indicating tightness or slack within the economic cycle.
• A Neutral regime suggests a mid-cycle or stable phase, not displaying extremes of early or late-cycle dynamics.
• It complements other labour market signals such as "Employment Composition" (2) and "Labor Market Tightness" (3), and contributes to the "US Macro Regime State" (4).

Data & References:

• Initial Claims, Seasonally Adjusted (ICSA), latest observation 2025-12-31.
• Continuing Claims, Seasonally Adjusted (CCSA), latest observation 2025-12-31.
• Total Nonfarm Payrolls, Seasonally Adjusted (PAYEMS), latest observation 2025-12-31.
• Additional public datasets that would improve depth or reliability include the "Wage Growth and Inflation Signal" (5) and "Underemployment Risk Signal" (6).