Initial Jobless Claims Surprise with Drop of 7,000 as Dow Sets Another Record High

Andrew Klips |

Wall Street Stock MarketThe number of Americans filing for first time jobless benefits dropped to the lowest level in more than a month, lending credence to the ongoing recovery of the nation’s employment situation, according to Thursday’s weekly report on initial jobless claims from the Labor Department.

Hitting the lowest level since January 19, first-time claim applications, a rough gauge of new lay-offs, surprisingly dropped by 7,000 to a seasonally adjusted 340,000 during the week ended March 2. Economists were anticipating claims to increase to 354,000 from a revised 347,000 for the week earlier. The Labor Department had upwardly revised the week prior claims by 3,000.

The four-week moving average, generally regarded as a better barometer of the labor market because it eliminates weekly volatility, fell to 348,750 from a revised 355,750 the prior week, representing the lowest level in five years.

No states were estimated and no conditions were out of the ordinary for the latest report, according to the agency.

Continuing claims, or the number of people already receiving unemployment benefits, edged upward by 3,000 to a seasonally adjusted 3.09 million for the week ending February 23. Continuing claims are reported at a two-week lag. The one-month average of continuing claims was lower by 37,500 to 3.12 million.

The total number of people claiming benefits in all programs for the week ending February 16 was 5,401,893, a decrease of 362,275 from the previous week, and down sharply from the 7,387,649 persons claiming benefits in all programs in the comparable week in 2012. Total claims are reported at a three-week lag.

Overall, the tone is optimistic at the moment for the U.S. jobs condition as it appears employers are not afraid to keep larger staffs, despite concerns about the fiscal cliff and increased payroll taxes in January and sequester cuts more recently. Economists have been hawking consumer spending and business activity in the wake of higher payroll taxes as less activity and spending would more than likely lead to employers cutting staffers. Most indications are pointing to the jobs market is gaining traction.

Investors will now be watching for tomorrow’s monthly report from the Labor Department on the unemployment rate to see how many jobs the nation added in January.

The unemployment rate was 7.9 percent in December with 157,000 jobs added during the month. Economists are expecting a slight decrease in unemployment to 7.8 percent for the country and about 170,000 jobs to have been added.

The markets are reacting favorably to today’s report, with the Dow Jones hitting another all-time high of 14,337.82 in early morning trading and the S&P 500 inching ever-closer to a record itself that stands at 1,576.09. The S&P has moved as high as 1,545.25 in early action. The Nasdaq is also trading in the green, but only marginally with gains around 4 points.

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