With the calendar year nearly over, those hoping to see 2014 end on an encouraging economic note will be pleased with the new Labor Department report on initial unemployment claims.
The number of people who applied for U.S. unemployment benefits fell by 6,000 to 289,000 in the seven days ended Dec. 13, keeping initial jobless claims at a low level typically associated with strong hiring. Economists polled by MarketWatch had expected claims to total a seasonally adjusted 295,000. Initial claims are often quite volatile in the period stretching from Thanksgiving until the end of January because of the holiday season and poor weather.The average of new claims over the past month, meanwhile, dipped by 750 to 298,750, the Labor Department said Thursday. The four-week average smoothens out seasonal volatility in the weekly report and is seen as a more accurate predictor of labor-market trends.
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, we’ve been 300,000 in 14 of the last 15 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.