Initial unemployment claims have been distorted of late by the government shutdown and processing delays in California, but we’ve nevertheless seen some steady progress over the last month or so. The totals are not, however, nearly as heartening as they were over the summer.
The number of people who applied for U.S. unemployment benefits last week fell by 10,000 to 340,000, but initial claims are still above end-of-summer levels even though California says it has fixed computer problems that delayed thousands of claims over the past two months. Economists polled by MarketWatch had expected claims to fall to a seasonally adjusted 337,000 in the week ended Oct. 26. The four-week average of claims, usually a more reliable number, rose by 8,000 to 356,250, touching the highest level since mid-April.
To reiterate the point I make every Thursday morning, it’s worth remembering that week-to-week results can vary widely, and it’s best not to read too much significance into any one report.
In terms of metrics, when jobless claims fall below the 400,000 threshold, it’s considered evidence of an improving jobs landscape, and when the number drops below 370,000, it suggests jobs are being created rather quickly. At this point, despite the recent spike, we’ve been below 340,000 in 11 of the last 16 weeks.
Above you’ll find the chart showing weekly, initial unemployment claims going back to the beginning of 2007. (Remember, unlike the monthly jobs chart, a lower number is good news.) For context, I’ve added an arrow to show the point at which President Obama’s Recovery Act began spending money.