Traders are returning from a day and a half off to celebrate Christmas to news that fewer Americans filed for first-time jobless benefits last week, a sign that the labor market is remaining resilient. However, it’s notable that the Bureau of Labor Statistics is still struggling with seasonal adjustments to the figure, something that happens at this time of the year because of holidays.
For the week ended December 21, the Labor Department reported that initial jobless claims, a rough gauge of weekly layoffs, fell to 338,000 from an upwardly revised 380,000 (from an original estimate of 379,000) in the week prior, which was the highest number of claims since March. Economists expected claims to drop to 345,000.
The four-week moving average, a less volatile measure of jobless trends than the weekly figure, increased by 4,250 to 348,000.
Continuing claims, which count the number of people already receiving benefits in all state programs, increased to 2.923 million in the week ended December 14 from 2.877 million a week earlier. That’s the highest level since August. Continuing claims come at a one-week lag to initial claims and do not include benefactors in federal programs.
Total claims, which tally all the recipients of benefits from state and federal programs, decreased by 132,858 to 4.279 million. Total claims come at a two-week lag to initial claims. At the same time in 2012, total claims were much higher at 5.472 million.
Thirty-five states and territories reported a decline in claims for the week ended December 14, led by New York (-12,706), Pennsylvania (-10,866) and Georgia (-8,340). 18 states reported a rise in claims, paced by (+4,622), Illinois (+3,686) and Massachusetts (+2,331).
Pundits encourage caution in placing to much weight on claims figures at this time of the year as the numbers are abnormally volatile. This trend will continue into January, until fluctuations related to the holidays dissipate. For now, the drop in claims is supportive of the Federal Reserve’s decision to begin trimming its monthly stimulus package by $10 billion starting in January.
After the latest two-day meeting of the Federal Open Market Committee on December 18, the Fed made the taper announcement and also revised its economic outlook for 2014, saying that the unemployment rate could drop as low as 6.3 percent by the end of the year. In September, the main bank had forecast a range of 6.4 percent to 6.8 percent.
Stocks have been on a tear lately, with the Dow and S&P 500 rising in seven out of the last eight trading sessions and closing at all-time highs. At the start of Thursday trading, it looks like Santa brought the bulls some more fodder, with the Dow rising another 50 points, the S&P 500 up 4 points and the tech-rich Nasdaq adding 11 points.