Where Is the Labor Market Recovery Heading in 2014?

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After a volatile December, initial applications for unemployment benefits dropped to the lowest level recorded since November. As the Department of Labor reported on Thursday morning, jobless claims decreased 15,000 to 330,000 in the week ended January 4, which is considered the fifth and final week of December.


Early in December, initial claims for unemployment benefits ticked upward. After months as one of the only sources of strength in labor market, that uptick appeared to be cause for concern. Excluding the effects that Washington’s political drama had on jobless claims in the month of October, the number of Americans applying for unemployment benefits has been trending down for much of the year.

And even though initial claims data — which serves as a proxy for layoffs — does not tell the whole labor story, that strength was encouraging. Yet after jumping 69,000 claims to 369,000 in the week of December 7 and rising 11,000 to 380,000 in the week of December 14, initial applications began falling once again.

After increasing in the previous week, the four-week moving average fell in the week ended January 4. 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. Mesirow Financial’s chief economist, Diane Swonk, told CNBC it is “the trend in employment that matters, and the trends have been good.”

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