The news on initial unemployment claims over the last several weeks was so encouraging, we were starting to get a little spoiled. There are, however, some bumps in this road.
The number of people who applied for new unemployment benefits surged by 32,000 to 360,000 in the week ended May 11, putting jobless claims at the highest level in a month and a half, according to the U.S. Labor Department. Economists surveyed by MarketWatch had expected claims to rise to a seasonally adjusted 330,000 from a revised 328,000 in the prior week…. The average of new claims over the past month, which smoothes out weekly volatility, rose a much smaller 1,250 to 339,250 and remained near a five-year low.
It’s only natural to wonder whether sequestration cuts contributed to the unexpected spike, but a Labor Department official told Marketwatch that there’s no evidence to connect the two, at least not yet. We’ll know more in the coming weeks.
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 19 of the last 22 weeks, and below 350,000 in four of the last six 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.