Jobless Claims: Is No News, Good News?
Jobless claims — which serve as a proxy for layoffs — highlight the fact that emerging unemployment is returning to acceptable levels. Or, in other words, fewer Americans are being laid off, even if the nation’s long-term unemployment level remains elevated. And unemployment data released by the Department of Labor Thursday confirms the healing of the labor market continues its slow progress; in the week ended June 14, fewer Americans filed initial applications for unemployment benefits. Beating economists expectations, jobless claims decreased 6,000 to 312,000 from the previous week’s upwardly revised 318,000.
However, while the long-term trend in jobless claims is one of decline, examining weekly numbers shows progress can be rather uneven. Last month, Americans filed the fewest number of first-time applications for unemployment benefits in seven years, meaning the last time jobless claims — and by association, emerging unemployment — fell so low was before the financial crisis and subsequent recession. But in the weeks that followed, jobless claims rebounded from the 297,000-claim low, and, as RBS Securities economist Omair Sharif noted recently, initial jobless claims have rarely stabilized at or below that key 300,000-claim level.
Of course, weekly upticks are not horrible news for the jobs recovery; economists say any claim figure below 350,000 indicates moderate job creation. And according to Moody’s Analytics senior economist Ryan Sweet, recent claim figures suggest the United States will “have another decent gain in non-farm payrolls” this month. The drop in the four-week moving average of jobless claims suggests a similar reality. Jobless claims provide the first look at the employment situation for any given month, but since the weekly figures can be volatile, economists use the four-week moving average to understand wider trends in employment, which are far more telling of labor market health than weekly readings. Alongside the modest increase in weekly claims, the four-week average dropped to 311,750 from the previous week’s 315,500. Even with this decrease, the average rests just above the seven-year low of 310,200 hit earlier this year.
Meanwhile, the number of workers continuing to draw unemployment benefits declined by 54,000 to a seasonally adjusted 2.56 million in the week ended June 7. That is the lowest level of continuing claims recorded since October 2007. Continuing claims are reported with a one-week lag.