U.S. jobless claims improve mildly; productivity remains strong

u-s-jobless-claims-improve-mildly-productivity-remains-strongModest progress occurred on the employment front as initial jobless claims fell 5,000 to 457,000 for the week ending Nov. 28, the lowest initial jobless claims total in more than a year, the U.S. Labor Department announced Thursday. But continuing claims rose 28,000 to 5.47 million in the Thanksgiving holiday-shortened week.

Separately, Monster Worldwide (MWW) said its employment index, which measures the online activity of companies posting job openings, fell to 119 in November from 120 in October, Reuters reported Thursday.
Economists surveyed
by Bloomberg News had expected initial jobless claims to rise to 495,000. Meanwhile, the 4-week moving average for initial jobless claims dropped 14,250 to 481,2500. A year ago, initial jobless claims totaled 517,000 and continuing claims totaled 4.10 million.

Regarding jobless claims, economists view the 4-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 after sustaining a job loss. In general, continuing claims above 3 million reflect a slack labor market, and point to extended job searches of six to nine months or longer.

Leaner Companies Boost Productivity

Belt-tightening by U.S. corporations has kept productivity rising at an astounding pace. The Labor Department said Q3 productivity (revised) increased 8.1% while Q3 unit labor costs (revised) fell 2.5%. Results of a Bloomberg News survey had predicted Q3 productivity to increase 8.5% and unit labor costs to fall 4.2%. During the past 12 months, productivity has increased at an impressive 4% rate.

Concerning jobless claims, the largest increases for the week ending Nov. 21 (the latest week for which data is available) were in: California, 14,796; Illinois, 6,168; North Carolina, 5,557; Pennsylvania, 5,285; and Texas, 3,500. The largest decreases were in: Michigan, -1,242; Indiana, -987; Hawaii, -195; Oregon, -167; and the Virgin Islands, -10.

Also, the highest insured unemployment rates for the week ending Nov. 14 (the latest week for which data is available) were in: Puerto Rico, 6.1%; Oregon, 5.9%; Alaska, 5.5%; California, 5.2%; Nevada, 5.2%; Michigan, 5.1%; Pennsylvania, 5.0%; Wisconsin, 5.0%; North Carolina, 4.8%: and Washington, 4.7%.

Economic Analysis

With the qualifier that it was a holiday-shortened week, which typically reduces claims because there are fewer filing days, the jobless claims total of 457,000 nevertheless came in well below the 495,000 consensus estimate. But investors should focus on the 4-week average, which at 495,500 continues to trend lower -- a good sign for the U.S. economy.

Also impressive: U.S. productivity. Although the Q3 stat of an increase of 8.1% was revised lower from the previously-released 9.5% gain, that's still an enormous increase in output per worker -- one that largely reflects really lean corporations. Businesses continue to find ways to get more out of their (often smaller) staffs. Meanwhile, the 2.5% reduction in Q3 unit labor costs reflects the very slack labor market conditions: With roughly six people unemployed per job vacancy, there is little upward wage pressure in the economy.
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