Initial Jobless Claims Drop to 2008 Level

Figures released Thursday morning from the Labor Department showed that initial jobless claims for the week ended January 12, 2013 dropped to their lowest levels since the week ended January 19, 2008, signaling ongoing improvement in the jobs market.  The fed agency reported that its estimate of first-time applications for jobless benefits decreased by 37,000 to a seasonally adjusted 335,000 from the prior week’s revised figure of 372,000.  The figures far exceeded economist expectations of 369,000 claims for the week.

The government did note that the numbers could reflect difficulty in adjusting the data for lay-offs of holiday season workers.  To that end, the revisions in coming weeks may cause the number to jump upward.

The 4-week moving average, regarded as a better barometer of labor trends because it eliminates volatility, was 359,250, a decrease of 6,750 from the previous week’s revised average of 366,000.

Continuing claims, those citizens whom have already been receiving jobless benefits, increased 87,000 to 3.21 million for the week ended January 5. That closely watched figure outpaced economist predictions of a drop to 3.1 million.

All tallied, about 5.82 million people in the U.S. collected benefits of some type for the week ended December 29, an increase of 465,547 from the week prior.  In the same week of 2011, 7.83 million people received benefits.

The amount of weekly claims has been relatively stable throughout the fourth quarter, outside of some quirky movements because of Hurricane Sandy pummeling the East Coast late in October.  Claims had surged as high as 600,000 during the “Great Recession” in 2008 and 2009, but have been holding below 400,000 since the end of 2011.

The lower claims this past week inspires some cautious optimism because if there wasn’t a serious quirk in job retention it is a positive sign that companies are keeping full staffs after the holidays.  However, economists are watching carefully for any effects on consumer spending resulting from the new hikes in payroll taxes that went into effect as part of the deal to avert the fiscal cliff at the first of the year.  If consumers tighten their budgets because of losing an extra 2 percent each week, it could impact employers decisions to keep workers on staff.

After having its first red day on Wednesday after five straight winning sessions, the Dow Jones Industrial Average is back on the climb.  Early in trading on Thursday, the Dow is up 40 points, the S&P 500 has advanced 4 points and the Nasdaq is ahead by 11 points.