The news on initial unemployment claims has been quite encouraging lately, but the trend is never a straight line, and as we’re reminded this morning, there are exceptions to the good news.
The number of people who applied for unemployment benefits last week jumped by 18,000 to 354,000, putting initial claims back near the recent average and indicating little change in a modestly improving labor market. Economists polled by MarketWatch had expected claims - a proxy for layoffs - to increase to a seasonally adjusted 340,000 in the week ended June 15. The average of new claims over the past month, a more reliable gauge than the volatile weekly number, rose by 2,500 to 348,250, the U.S. Labor Department said Thursday.
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. We’ve been below the 370,000 threshold 24 of the last 27 weeks, and below 350,000 in 7 of the last 11 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.