The Department of Labor released its latest count of initial jobless claims, and the news is good — but only incrementally. The big spike in weekly jobless claims has reduced itself down from a peak of 474,000 three weeks ago to 409,000 last week. We are still significantly above the trend from earlier in the year that had initial jobless claims in the 380K range, however:
In the week ending May 14, the advance figure for seasonally adjusted initial claims was 409,000, a decrease of 29,000 from the previous week’s revised figure of 438,000. The 4-week moving average was 439,000, an increase of 1,250 from the previous week’s revised average of 437,750.
The advance seasonally adjusted insured unemployment rate was 3.0 percent for the week ending May 7, unchanged from the prior week’s unrevised rate of 3.0 percent.
The advance number for seasonally adjusted insured unemployment during the week ending May 7 was 3,711,000, a decrease of 81,000 from the preceding week’s revised level of 3,792,000. The 4-week moving average was 3,728,250, an increase of 750 from the preceding week’s revised average of 3,727,500.
Weekly jobless claims began spiking upward five weeks ago, with a relatively mild increase of 27,000 to move back across the 400K line. At the time, I warned not to take one week’s data as a trend, but the next four reports showed claims staying above the 400K mark, including this one. Clearly something happened to create more volatility in the job market and send people back to unemployment lines on a weekly basis, but it’s not as clear what happened.
Today’s level is nearly identical to that report from mid-April, but Reuters considers it unexpected good news:
The number of Americans filing new claims for unemployment benefits fell more than expected last week, offering hope the labor market recovery remains on track.
Initial claims for state unemployment benefits fell 29,000 to a seasonally adjusted 409,000, the Labor Department said on Thursday, continuing to unwind the prior weeks’ spike.
Economists polled by Reuters had forecast claims dropping to 420,000. The prior week’s figure was revised up to 438,000 from the previously reported 434,000.
Still, Reuters notes that the level remains high, although they fudge a little on what it means:
Despite the fall, claims held above the 400,000 mark for a sixth straight week, indicating payroll growth will only be gradual. The four-week average has now been above that level, which is normally associated with stable job growth, for four weeks in a row.
Stable jobs growth or stale jobs growth? Normally, economists need a reduction into the 300K-325K range to consider the economy in a stable job growth pattern of any kind. The 400K level usually means a growth rate barely able to keep up with population growth, which requires an average of 100K new jobs a month. Getting below a 400K level is progress, but not a goal. And thus far, the economic growth in Obama’s third year isn’t able to consistently keep that progress in place.