After several discouraging weeks in a row, initial unemployment claims finally showed a sudden and unexpected improvement in this morning's Department of Labor report.
The number of people who applied for new unemployment benefits fell sharply last week after a big surge the week before, largely reflecting seasonal quirks around the Easter holiday and suggesting little change in a slowly improving U.S. labor market. Initial claims declined by 42,000 to 346,000 in the week ended April 6, the Labor Department said Thursday. That's the lowest level in three weeks. Economists surveyed by MarketWatch expected claims to fall to a seasonally adjusted 360,000. The average of new claims over the past month, which smoothes out weekly volatility, rose by 3,000 to 358,000.
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. We've been below the 370,000 threshold 15 of the last 17 weeks, though today's report was the first drop in claims since early March.
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.