Initial jobless claims edge lower, continuing claims plunge again

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More good news on the employment front: Initial jobless claims fell 12,000 to 502,000 for the week ending Nov. 7, and continuing claims continued to plunge, falling 139,000 to 5.63 million, the U.S. Labor Department announced Thursday.

A Bloomberg News survey had expected initial jobless claims to fall to 512,000 this week. Meanwhile, the four-week moving average for initial jobless claims decreased 4,500 to 519,750.

A year ago, initial jobless claims totaled 509,00 and continuing claims totaled 3.93 million.
Regarding jobless claims, economists view the four-week average as a better indicator of unemployment conditions, as it smooths out anomalies caused by strikes, holidays or 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 after losing a job. In general, a continuing claims number above 3 million reflects a slack labor market, and points to extended job searches of six to nine months or longer.

The Brookings Institute, a primarily liberal think tank in Washington, D.C., said one way to prevent a double-dip recession would be to remain committed to existing stimulus programs. "What is essential ... is the continuation of stimulus programs that are currently scheduled to expire. Last week the House and Senate extended unemployment protection for workers who have lost jobs in the current recession. These protections ought to be extended until the job market improves significantly and it becomes easier for laid off workers to find jobs," National Journal Senior Fellow Gary Burtless wrote. "If unemployment is likely to remain over 9% for an extended time, there is a compelling case for additional public infrastructure investment. Given high unemployment in the construction and capital goods industries and federal borrowing costs that remain near a post-war low, it makes sense to invest in public capital projects over the next few years."

The largest increases in initial claims for the week ending Oct. 31, the latest week for which data is available, were in: Wisconsin, 1,501; Illinois, 1,390; Michigan, 1,135; Puerto Rico, 1,101; and Texas, 965. The largest decreases were in California, -6,752; Florida, -3,409; Georgia, -2,686; New York, -2,607, and North Carolina, -1,872.

Also, the highest insured unemployment rates for the week ending Oct. 24, the latest week for which data is available, were in: Puerto Rico, 6.4%; Oregon, 5.4%; Nevada, 5.2%; Pennsylvania, 4.9%; Alaska, 4.8%; Arkansas, 4.8%; California, 4.8%; Wisconsin, 4.8% North Carolina, 4.6%; Michigan, 4.5% and South Carolina, 4.5%.

Economic Analysis

The key data points this week: More substantial declines – 139,000 – in continuing claims, and the fall in initial claim increases in the states. Both of these items are encouraging. Investors should note how even the states with the worst initial claims increases are seeing only small increases -- 1,500, 1,135, etc., -- and how claim decreases are rising. Translation: Initial jobless claims have peaked in most states – another sign of a labor market that's beginning to heal.
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