Monthly Average of Initial Jobless Claims Drops Near Pre-Recession Level

First-time filings for jobless benefits again beat economist predictions by falling to their lowest level since January 2008 in the week ended May 4, according to a report Thursday from Washington. The four-week moving average dropped to its lowest level since late 2007.

The Labor Department said that filings for initial jobless claims decreased by 4,000 to a seasonally adjusted 323,000 in the latest week from a revised 327,000 (up from 324,000) in the week ended April 27. Economists were expecting the number of claims to increase to 336,000.

Suggesting a continually improving jobs market, the monthly average of claims, a closely watched measure of labor trends because it strips-out weekly volatility, dropped by 6,250 to 336,750. That marks the lowest level since November 2007, a time when the “Great Recession” was just getting underway.

This new data dovetails pretty nicely with the report last Friday by the Labor Department that showed the U.S. added 165,000 nonfarm jobs in April and the unemployment rate edged down to 7.5 percent from 7.6 percent in March. If the trend can hold true for the next few weeks, economists and investors will be looking for an upbeat employment situation report for the month of May when it is delivered early in June.

Generally, initial jobless benefits, a gauge of weekly lay-offs, will decrease as the economy creates more jobs. However, the caveat is that job creation has slowed in recent months, meaning that companies may not be firing staffers, but they aren’t hiring new employees either.

For the week ended April 27, the seasonally adjusted insured unemployment rate was 2.3 percent, the same as the week prior (and the same as the week prior to that). In the same week of 2012, the rate was 2.5 percent.

The total number of people making claims in all programs for the week ended April 20 was 4.87 million, down by 89,292 from the week earlier. In the same week of 2012, 6.42 million people were claiming benefits. The total number includes people receiving extended benefits through federal programs.

The biggest increases in claims during the week ended May 4 were in Illinois (+1,744), Oregon (+1,244) and New Hampshire (+765). The biggest decreases were reported in California (-3,721), Michigan (-2,993) and Wisconsin (-2,623).

The report was really the only “market moving” piece of data served on the economic plate this week. Next week reports will substantially increase. The markets, which have chosen to have selective hearing to economic data lately are ignoring the upbeat claims information. Early in Thursday trading, the Dow is down by about 23 points, the S&P 500 is off by 5 points and the Nasdaq is lower by 9 points.