Initial jobless claims rise, but continuing claims fall

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It was a bit of a wash on the employment front -- initial jobless claims rose 25,000 to 584,000, the Labor Department announced Thursday, but both the four-week moving average and continuing claims extended their downward treks.

The four-week moving average for initial jobless claims decreased 8,250 to 559,000, while continuing claims fell 54,000 to 6.197 million.

Economists view the four-week average as a better indicator of unemployment conditions, as it smooths-out anomalies for strikes, holidays and other idiosyncratic events.

Economists also monitor the continuing claims stat because it provides a snapshot of how long it's going to take the typical person to find comparable employment once he/she has sustained a job loss. In general, continuing claims above three million reflect a slack labor market, and point to extended six-to-nine month (or longer) job searches.

Economists surveyed by Bloomberg News had expected this week's initial jobless claims to total 585,000.

Still, the nation's deepest recession in more than 20 years has created a troubling job market, according to the Economic Policy Institute, a liberal think tank based in Washington, D.C. As of June, there were nearly six qualified employees for every job opening in the United States, the EPI said, and more than 25 million Americans are now lacking the work they want.

Economic Analysis: Investors should not be alarmed by the weekly jobless claims rise. As noted, economists view the four-week average as a better indicator of unemployment conditions, so the recent labor market data remains pointed in a bullish direction for the U.S. economy: down.

Nevertheless, investors, as well as business executives, need to keep the recent minor improvement in labor market conditions in perspective: it is not tantamount to job growth, and an enormous amount of work remains ahead for the U.S. economy and for policy makers. The U.S. economy has to add about 200,000 jobs per month -- or a roughly net 100,000 job gain over the monthly gain needed to keep unemployment from rising -- for the next five and a half years to replace the 6.5 million jobs lost during the recession, an enormous task for a rapidly growing, emerging market economy, let alone a developed nation.

Put another way, assuming normal job growth and a typical recovery and expansion, the United States would not achieve full employment until late 2014 or early 2015.
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