Going into this morning, many expected initial unemployment claims to improve, but few thought the new figures would be this encouraging.
The number of people who applied for new unemployment benefits fell by 19,000 to a seasonally adjusted 326,000 in the week ended July 27, marking the lowest level since January 2008, the government said Thursday. Economists surveyed by MarketWatch expected claims to total 345,000 on a seasonally adjusted basis. The claims data, however, often jumps up and down in July because of big seasonal changes in employment in the auto industry and education sector.
Those caveats are certainly worth keeping in mind, though by any measure, the fact that claims have been this low in five-and-a-half years is obviously encouraging.
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 below 350,000 in 12 of the last 17 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. Tomorrow, incidentally, is the day when the new monthly job totals will be released.