For those who keep an eye on initial unemployment claims, the news this morning was clearly discouraging, though the seasonal caveats matter.
The number of people who applied for unemployment benefits in the first week of July jumped by 16,000 to a seasonally adjusted 360,000, marking the highest level in two months, the Labor Department said Thursday. Economists polled by MarketWatch had expected claims – a proxy for layoffs – to rise to 349,000 in the week ended July 6 from a slightly revised 344,000 in the prior week. The claims report often seesaws in July because of shutdowns at auto plants for retooling and temporary layoffs related to the end of the regular school year. The July 4 holiday can also skew the data.
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 27 of the last 30 weeks, and below 350,000 in 9 of the last 14 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.