Initial Jobless Claims Drop by 23,000 in Week Ended May 18

After an unexpected spike the week prior, the number of Americans filing for first time jobless benefits contracted again last week according to a weekly report from Washington on Thursday.

The Labor Department said that initial jobless claims, a barometer of weekly layoffs, declined by 23,000 to a seasonally adjusted 340,000 in the week ended May 18. Economists were expecting a drop in claims to 345,000. A week earlier, claims surprised with the largest one-week increase since November by swelling 32,000 to 360,000. That figure was upwardly revised in the Thursday’s report to 363,000.

The agency said that no states were estimated and there was no unusual data in the report.

The four-week moving average, a less volatile measure of the labor market, was lower this past week by 500 at 339,500. The one-month figure is holding near five-year lows.

Continuing claims, or those people already collecting benefits at the state level, was 2.912 million, down 112,000 from a revised 3.024 million the week earlier, marking the lowest level since March 2008. Continuing claims are reported at a two-week lag, meaning these figures were for the week ended May 11.

The total number of people claiming benefits under all programs, which included extended and emergency benefits from the federal government, was down by 98,450 to 4.745 million. Total claims are reported at a three-week lag. In the comparable period of 2012, 6.168 million people were claiming benefits, 23 percent more than this year.

Alaska held the highest insured unemployment rate for the week ended May 4 at 5.0 percent.

For the week of May 11, the biggest increase in claims came from California with 15,060, followed by North Carolina (+1,826) and Mississippi (+1,341). New Mexico paced the decliners with 754 fewer claims, followed by Oregon (-751) and New Jersey (-747).

Generally speaking, as initial jobless claims decline, the number of new hires increases, helping lower the nation’s unemployment rate. Jobless claims have been holding relatively steady near five-year lows, however new job creation has been benign. Companies seem comfortable holding staff levels consistent, but do not have the confidence to bring on new employees in light of federal budget cuts, known as the sequester, and a two-percent hike in payroll taxes earlier this year.

The unemployment rate holding at a still high 7.5 percent has the spurred the Federal Reserve to continue with its $85-billion-per-month in bond and asset purchases, known as quantitative easing. Stocks were rattled on Wednesday on comments from Fed Chairman Ben Bernanke coupled with the minutes of the latest Federal Open Market Committee meeting from earlier this month showing some indecisiveness about when the stimulus program will end or be reduced.

Stocks are starting lower in early Thursday trading following the better-than-expected jobless claims report as a plunge in overseas’ markets and soft Chinese manufacturing data is giving traders a reason to dock some profits following new record intraday levels being hit on Wednesday before the sell-off began with FOMC minutes. The Dow is down 85 points, the S&P 500 is off by 16 points and the Nasdaq is lower by 32 points minutes into the trading day.