New and continuing jobless claims resume decline

Initial jobless claims fell 10,000 to 570,000 for the week ending August 22, the U.S. Labor Department announced Thursday. Meanwhile, continuing claims also fell, decreasing 119,000 to 6.133 million. Economists surveyed by Bloomberg News had expected jobless claims to total 565,000 this week. Also, the four-week moving average for initial jobless claims decreased 4,750 to 571,000.

Economists view the four-week average as a better indicator of unemployment conditions, as it smooths-out anomalies for 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 once he/she has sustained a job loss. In general, continuing claims above 3 million reflect a slack labor market, and point to extended six-to-nine month (or longer) job searches.

Further, the U.S stock market Thursday will likely interpret the renewed declines in initial jobless claims and continuing claims bullishly. Those declines, combined with a revised 1.0 percent decline in U.S. GDP, provide additional evidence that the U.S. recession is bottoming and that a recovery is underway.

Also, the highest insured unemployment rates for the week ending August 8, the latest week for which data is available, were in: Puerto Rico, 7.3 percent; Oregon, 6.1 percent; Pennsylvania, 6.0 percent; Michigan, 5.9 percent; Nevada, 5.8 percent; Wisconsin, 5.5 percent; California, 5.4 percent; Connecticut, 5.4 percent; New Jersey, 5.2 percent; North Carolina, 5.0 percent; and South Carolina, 5.0 percent.

Economic Analysis: Jobless claims resumed trending lower, but the level, 570,000, is still consistent with weak employment conditions. Even so, let's focus on all the positives in the U.S. economy: housing market stabilization, a slowing contraction in manufacturing, re-liquefied credit markets, fiscal stimulus deployment, and real GDP all suggest that the nation's longest recession since the 1930s is bottoming. This also likely means more employers will taper lay-offs, which points to positive U.S. GDP in the third and fourth quarters.
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