The number of Americans filing for first time jobless benefits last week declined in line with economist predictions, pushing claims back near five-year lows and suggesting a strengthening labor market again.
For the week ended August 24, the Labor Department said in its weekly report that seasonally adjusted initial jobless claims totaled 331,000, down 6,000 from the prior week’s revised figure of 337,000 (revised up from 336,000). Economists expected claims to decline to 330,000.
The four-week moving average increased by 750 to 331,250 from an unrevised figure the week earlier. The average is holding near its lowest level since 2007. Analysts tend to pay more attention to the one-month average of initial claims, a barometer of lay-offs, because it flattens out some weekly volatility. Claims below 350,000 are generally regarded as moderate growth in the jobs market.
Nothing unusual was found in the data and no states were estimated in the report.
Continuing claims, or the number of people already collecting state benefits, fell by 14,000 to 2.99 million during the week ended August 17. Continuing claims are reported at a one-week lag to initial claims.
The markets are closely monitoring initial claims and continuing claims to try and gauge if the numbers are sufficient to support the Federal Reserve tapering their policy of purchasing $85 billion every month in Treasuries and mortgage-backed securities. In addition to turmoil in the Middle East, a replacement for Fed Chairman Ben Bernanke and other topics, Wall Street has experienced volatility lately because of indecision as to when the Fed will start hitting the brakes on quantitative easing. Most economists are of the opinion that tapering will be announced at the Fed meeting September 17 – 18. Claims slightly rising in July provided fodder that tapering will be pushed back, but improving claims now have analysts guessing again.
The concern is that even though employers are reluctant to lay employees off, they’re not rushing to hire new workers, keeping continuing claims consistent and the unemployment rate well above 7 percent.
For the week ended August 10, total claims, which include people receiving benefits in all state and federal programs, rose to 4,467,574 from 4,438,656 the week earlier. At the same time in 2012, 5.53 million people were collecting claims.
The largest increases in initial claims for the week ending August 17 were in California (+5,867), Missouri (+1,757) and New Jersey (+677). The largest decreases were in North Carolina (-1,017), Pennsylvania (-899) and Maryland (-722). 43 states and territories reported declining claims, while 10 reported increases.
In a separate report on Thursday, the Commerce Department revised its estimate of second-quarter gross domestic product, showing that the economy accelerated more than first thought. The agency said that U.S. GDP expanded at a 2.5-percent annual rate during the quarter, up sharply from the 1.7-percent reported last month. Economists expected an increase to show 2.3-percent growth.
The markets are responding favorably to the data from Washington to continue recovering gains after a sharp sell-off on Monday and Tuesday. The Dow is ahead 27 points, the S&P 500 is up 3 points and the Nasdaq has risen 19 points in early trading Thursday.