Falling at a slower pace: Initial and continuing jobless claims drop

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Record a relatively good week for both jobless claims and continuing claims, as both numbers fell, another sign that the recession is weakening its grip. Initial jobless claims fell 26,000 to 550,000 for the week ending September 5, the U.S. Labor Department announced Thursday.

Continuing claims also fell, decreasing 159,000 to 6.09 million. Economists surveyed by Bloomberg News had expected jobless claims to fall to 565,000 this week. Meanwhile, the four-week moving average for initial jobless claims decreased 2,750 to 570,000.
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 has sustained a job loss. In general, continuing claims above three million reflect a slack labor market, and point to extended job searches of six to nine months or longer.

Moreover, the U.S stock market Thursday will likely interpret the renewed decline in initial jobless claims and continuing claims bullishly. Those declines, combined with signs of stabilization in the the nation's manufacturing and housing sectors, provide additional evidence that the U.S. recession has bottomed and that a recovery, however mild, is underway.

Also, the highest insured unemployment rates in the week ending Aug. 22, the latest week for which data is available, were in: Puerto Rico, 7.0 percent; Pennsylvania, 5.9 percent; Oregon, 5.9 percent; Michigan, 5.7 percent; Nevada, 5.7 percent; California, 5.3 percent; Wisconsin, 5.3 percent; Connecticut, 5.2 percent; New Jersey, 5.1 percent; North Carolina, 4.8 percent; Rhode Island, 4.8 percent; and South Carolina, 4.8 percent.

Economic Analysis: Jobless claims resumed trending lower, which is encouraging. Private sector payroll cuts are starting to slow down. There are still some public sector job cuts, but that job loss trend is lower too, another good sign. Nevertheless, the jobless claim level of 550,000 is still consistent with weak employment conditions. Even so, let's remain focused on all the positives in the U.S. economy: housing market stabilization, a slowing contraction in manufacturing, re-liquefied credit markets, and ongoing fiscal stimulus all suggest that the nation's longest recession since the 1930s is bottoming. There's also talk that the economy may start to record monthly job gains as early as Q1 2010. In sum, many economic data points are signaling that a recovery has begun.
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