The number of people who applied for new unemployment benefits climbed by 28,000 to 326,000 in the20eek ended May 17, erasing the prior week's decline, the U.S. Labor Department reported Thursday. Initial claims had fallen in the prior week to a seven-year low, but the sharp drop appeared to reflect seasonal quirks tied to a late Easter holiday that have now mostly faded away. Still, the level of claims continues to hover near a post-recession bottom, a sign that companies are cutting the fewest workers since the recession ended in mid-2009. Economists surveyed by MarketWatch expected initial claims to total 315,000 on a seasonally adjusted basis. The average of new claims over the past month dipped by 1,000 to 322,500. The monthly figure smooths out the gyrations in the weekly data and offers a better look at underlying labor-market trends.
Last week's report on initial unemployment claims showed the best results in seven years, even predating the start of the Great Recession. Regrettably, the new data erased the good news.
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 340,000 in 17 of the last 20 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.