When it comes to initial unemployment claims, it looks like the new year got off to a good start.
The number of new applications for U.S. unemployment benefits fell by 15,000 to 330,000 in the week ended Jan. 4, bringing initial claims down to their lowest level since the end of November, the Labor Department said Thursday. Economists surveyed by MarketWatch expected claims to decline to 330,000 on a seasonally adjusted basis. Claims are always volatile in early January because of the end of the holiday season, however, and the report is less reliable as an indicator of the pace of layoffs and labor-market trends. The numbers usually return to normal at the end of the month. The average of new claims over the past four weeks, a more reliable gauge, dropped by 9,750 to 349,000.
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 370,000 in 12 of the last 13 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.