Nonfarm Payrolls Relationship to Jobless Claims

On Friday, we'll get the monthly employment report, which is expected to show an increase of 130k non-farm payrolls.  Even though the broad employment report comes out once per month, each Thursday we get a glimpse of what the employment situation looks like from initial jobless claims.  Initial claims reports can often move the market, but how good is the initial claims data at predicting payrolls?

Below is a regression of the 4-week trailing average of initial claims against the monthly payrolls data.  The r-squared of the simple linear regression is .54--not a perfect correlation, but relatively meaningful.

Recently, the 4-week average of initial claims has risen somewhat, back to 370k.  From the regression 370k initial claims would imply somewhere around a 55k increase in non-farm payrolls.  This would be well short of estimates.