The number of individuals filing jobless claims last week fell to a 4 ½ year low, according to the Labor Department. Americans seeking jobless benefits decreased to 350,000 compared to 362,000 the week ending December 22. The 41 economists polled in the Bloomberg survey predicted a median figure of 360,000. The figure for workers who continue to collect jobless benefits dropped by 32,000, down to 3.206 million.
One caveat for the latest jobless claim figures is that 19 states and territories submitted estimates because state and federal offices were closed on Monday because of the Christmas holiday.
The Labor Department revised up last week’s jobless numbers by 1,000– from 361,000 initially reported to 362,000. Following the damage left in the wake of Hurricane Sandy, jobless claims climbed in late October. A few weeks later, applications for jobless benefits have dropped to the lowest point since the beginning days of the last recession.
Four-Week Moving Average
The four-week moving average decreased to 356,750, a decline of 11,250 compared to the prior week. It is the lowest level for the four-week moving average going back to March 2008. Although weekly job claims has no direct association with the Labor Department’s monthly Job Situation report, it provides some evidence that the momentum of job losses, which has plagued the U.S. economy since the last recession, may have subsided.
Are Layoffs Finally Over?
Many analysts exercise caution when it comes to the use of weekly jobless claims data to infer that job losses have finally run its course. In the last several months, businesses have been slow to hire new workers. Some economists predict that the January 4 release of the job report will show a decrease in the number workers hired in December, dropping from 146,000 new hires in November to 143,000.
Through 2012, companies have increased their payrolls by an average of 151,000 jobs each month. In 2011, businesses added an average of 153,000 new hires a month.
Senior economist Michelle Meyer, of Bank of America Merrill Lynch at New York, states that “There is usually a high margin of error in predicting the monthly payroll number.” Factors like the super storm and seasonal and year-end adjustments can also skew the payroll numbers, according to Meyer.
Another positive nugget about the jobless claims data, it shows businesses have stabilized their workforce, which provides the prelude necessary before a pick-up in job creation can occur. Jefferies Group Inc. (New York) economist Tom Simons touts the resiliency of the job market, especially in light of the sluggish pace of the U.S. economy.
In addition, the Federal Reserve’s announcement that it intends to maintain an accommodative monetary policy bodes well for fueling job growth and making a serious difference in the unemployment rate.