Initial Jobless Claims Drop to 323,000 in Week Ended August 31

The number of Americans filing for first-time jobless benefits last week fell more than expected, according to the weekly report from the Labor Department, signaling that the nation’s labor market continues to slowly trudge forward.

For the week ended August 31, the agency said that initial jobless claims, a proxy of weekly layoffs, dropped by 9,000 to a seasonally adjusted 323,000.  Meanwhile, the week prior’s figure was revised upward by 1,000 to 332,000.  Initial claims are holding near five-and-a- half year low.  Economists had expected initial claims to come in at 330,000 for last week.

The four-week moving average, a less volatile gauge of the jobs market because it irons out weekly fluctuations, decreased by 3,000 to 328,500 from the week prior’s revised 331,500 (revised up from 331,250).  The four-week moving average is at its lowest level since October 2007, two months before the recession began.

Continuing claims, or those people that are already receiving state benefits (but not including those in federal programs), dropped by 43,000 to 2.951 million in the week ended August 24.  Continuing claims are reported at a one-week lag to initial claims.

The total number of people receiving benefits is all programs declined by 72,061 to 4,395,712 for the week ended August 17.  Total claims are reported at a two-week lag.  At the same time in 2012, the total number of beneficiaries was 24 percent higher at 5,470,041.

The largest increases in initial claims for the week ending August 24 were in New York (+3,568), Georgia (+903) and Connecticut (+604).  The largest decreases were in California (-2,544), Missouri (-1,713) and Kansas (-915).

In a report issued 15 minutes before the Labor Department report, ADP said that the private sector added 176,000 jobs in August, essentially in line with what analysts expected.  The service sector accounted for nearly all of the jobs, adding 165,000 positions during the month.

These reports are the precursor to the highly anticipated non-farms payroll figure that will be released by the Labor Department Friday morning at 8:30 AM EDT.  With the meeting of the Federal Open Markets Committee approaching in 12 days, analysts are examining reports about the jobs market to try and glean any information that could sway the Fed one way or the other to begin (or wait to begin) tapering of their monetary stimulus program.  The Fed currently buys $85 billion each month in Treasuries and mortgage-backed securities, but announced in June that it intends to scale that amount back as soon as it believes the economy can handle it.  Most economists anticipated that tapering was going to be announced this month after the FOMC meeting.

Economists are predicting that the economy added 174,000 new jobs in August and the unemployment rate held steady at 7.4 percent.