Jobless claims fall again, but continuing claims rise

The "green shoots" on the job front continue to grow, albeit slowly. Initial jobless claims fell another 24,000 to 601,000 for the week ended June 6, the U.S. Labor Department announced Thursday.

Economists surveyed by Bloomberg News had expected this week's initial jobless claims to total 625,000. Another positive sign for the economy: the four-week moving average decreased 10,500 to 621,750.

However, the long-term unemployed picture remains a serious concern, with continuing claims rising 59,000 to 6.82 million.

Economists note that the high continuing claims level reflects labor market stress, and the long time it takes for those downsized to find comparable employment. Few companies are filling vacancies, many major corporations have announced large lay-offs, and even temporary work assignments are at a low level -- all of which point to weak demand conditions in the U.S. economy.

Small victories

Steven Wood, president of Insight Economics LLC in California, said that there are bright spots in the current employment, but the progress is modest.

"The labor market is still deteriorating and the economy remains in recession, although both are becoming less severe," Wood told Bloomberg News Thursday.

More than 6 million Americans have lost their jobs since the recession began in December 2008. Further, many economists expect job losses to continue until at least Q4, perhaps as long as Q1 2010, as the auto sector sheds unneeded positions and the U.S. economy continues to restructure. Further, unemployment, a lag indicator, may not peak until mid to late 2010, with most economists seeing a top at or near 10 percent. The current U.S. unemployment rate is 9.4 percent.

Economic Analysis: The continuing claims level remains really problematic, but the stock market will likely emphasize the trending-lower jobless claims stat. Simply, if jobless claims have peaked and repeatedly fall week after week, that would be the best news for the U.S economy since the recession started. It would not signal net job growth, but jobless claims declines point to a day when demand will start to rise.

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