A Small Step Forward for Initial Jobless Claims

Job fair
Job fair

With the latest weekly initial jobless claims declining 6,000 to 472,000, the U.S. labor market has eked out some modest improvement. Continuing claims also decreased, by 23,000, to 4.46 million, and the less-volatile and more-telling four-week moving average fell by 2,500 to 485,500. A Bloomberg survey had expected initial jobless claims to dip a bit more, to 470,000.

Putting the week's improvement into perspective, jobless claims need to drop below 400,000 during the next two quarters to give economists and investors confidence that commercial activity is increasing at a pace that prompts most companies to curtail layoffs and resume hiring. However, the picture is far less gruesome than it was a year ago, when initial claims totaled 568,000, the four-week moving average was 566,750 and continuing claims totaled 6.11 million.

Separately, the Monster (MWW) Employment Index dipped 2 points to 136 in August -- its second straight monthly decline, Monster announced Thursday. Monster noted that the dip in August was "possibly due to moderation in underlying job market drivers." The index, which measures employers' intentions to hire, is still up 12% -- or 16 points -- compared to a year ago. Monster said all 28 metro areas it tracks showed a year-over-year increase in jobs posted online.

Unit Labor Costs Tick Up 1.1%

The Labor Department also reported that U.S. worker productivity fell 1.8% in the second quarter, a downward revision from the initially released 0.9% decline. It marks the first decline in productivity in eight quarters. In addition, unit labor costs rose 1.1% in the quarter. A Bloomberg survey had expected productivity to drop 1.9% and unit labor costs to rise 1.2%.

On the jobless front, states reported 4.55 million people claiming Emergency Unemployment Compensation (EUC) benefits for the week ending Aug. 14, the latest period for which data is available, an increase of 281,676 from the prior week. A year ago, 3.08 million people were claiming EUC benefits.

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The highest insured unemployment rates for the week ending Aug. 14 were in Puerto Rico, at 6.9%; Pennsylvania, 4.8%; New Jersey, 4.6%; Oregon, 4.5%, and Alaska, 4.4%.

This week's jobless claims report represents a qualified ray of light for the U.S. economy. After a rise that was boosted by seasonal layoffs, jobless claims are now going in the right direction again. But they're not going down fast enough.

And after an impressive nearly two-year stretch of productivity gains, that measure slippage may seem like a sour note, but it will likely help decrease jobless roles. Most economists believe companies have trimmed payrolls and increased productivity about as much as they could, given current operations. In order to increase output or deploy new projects,they'll now have to start hiring, much to the economy's benefit.