Wall Street's Most Accurate Economist Reveals His Favorite Chart, Which Shows Why Today's Jobs News Is So Good

High Frequency Economics' Jim O'Sullivan was recognized as MarketWatch's forecaster of the year and he is also listed as a top U.S. economic forecaster by Bloomberg BRIEF.

And in his latest daily note, he shared his favorite chart: the 3-month average change in payrolls excluding temporary and the inverse of the monthly average jobless claims.

From O'Sullivan's latest note:

In theory, net employment growth can weaken significantly without an uptrend in claims -- if the slowing is due entirely to reduced hiring rather than increased firing. But it never works like that in practice. Significant weakening in the trend in employment growth is invariably reflected by an uptrend in claims. That is the point of our all-time favorite chart, which lines up the level of claims with the rate of change in payrolls.

O'Sullivan would probably agree that today's drop in claims is probably a good sign for employment.