The unemployment rate was released this morning surprising to the upside and reaching 4.0%. This is up 0.6 percentage points from the cycle low of 3.4%.
This is noteworthy, as increases in the unemployment rate of 0.6 percentage points from a cyclical low have confirmed each of the last 12 recessions (see red dots on graph below), with only one false signal in 1959.
While the unemployment rate still remains at a low level relative to history, it is moving in the wrong direction, and this historically reliable signal indicates that harder times likely lie ahead.