Perhaps setting a warm tone for tomorrow’s important nonfarm payroll report, a report from Washington on Thursday showed that the unemployment lines got shorter last week with the number of people filing for first-time jobless benefits dropping more than expected.
Labor Department Shows Jobless Claims Down for January
The Labor Department said in its weekly report that initial jobless claims fell to 331,000 in the week ended February 1 from the upwardly revised 351,000 (from an original estimate of 348,000) claims a week earlier. Economists were expecting new claims to slide to 335,000 last week.
The four-week moving average, regarded as a better gauge of labor trends because it irons out weekly volatility, inched up by 250 claims to 334,000. The figure is still well below the 350,000 weekly filings that economists say shows moderate jobs growth for the country.
While initial jobless claims, a barometer of weekly layoffs, have demonstrated some wide swings as the normally do during the holiday season, the one-month figure has still held within a relatively healthy range. To that point, employers are keeping their staffers in place, but not hiring new employees. The nonfarm payroll report for December showed that the U.S. only created a paltry 74,000 new jobs during the month, the smallest monthly advance since January 2011.
Market Watches for Jobs Data with Baited Breath
The report for January is scheduled for tomorrow, February 7. Economists are predicting that the country added 171,000 new jobs and that the unemployment rate held firm at 6.7 percent. Automatic Data Processing (ADP) estimated today that 175,000 jobs were created in January. ADP’s algorithms are designed to hit the final number from the Labor Department, which is released this month and then revised in the two subsequent months.
Continuing claims, or those people already receiving unemployment benefits in state programs, rose by 15,000 to 2.964 million in the week ended January 25. Continuing claims are reported at a one-week lag to initial claims.
Total claims, or the number of people collecting benefits under all state and federal programs, declined by 115,861 to 3.468 million for the week ended January 18. Total claims are delivered at a two-week lag. At the same time in 2013, total claims were 61 percent higher at 5.590 million.
Decrease in Jobless Claims is Across the Board, Markets React
Forty-nine of the 52 U.S. states and territories reported a decrease in initial claims in the week ended January 25. The only three increases were in Indiana (+5,407), Massachusetts (+1,050), and Nebraska (+12). The largest decreases were in New York (-7,083), Texas (-4,152) and Michigan (-3,929).
Wall Street is cheering the initial claims report, with the Dow Jones Industrial Average looking to perhaps have its best day of 2014 after shedding about 7 percent already in the new year. With a couple hours left in the trading day, the Dow is up by 140 points, the broader S&P 500 has added 17 points and the tech-heavy Nasdaq is up by 41 points.