nitial jobless claims unexpectedly plunged 27,000 to 451,000, the U.S. Labor Department announced Thursday. That's a long shot better than what a Bloomberg survey had forecast: It found initial jobless claims would dip to 470,000. The four-week moving average also plummeted, by 9,250 to 477,500, and continuing claims dipped 2,000 to 4.48 million.
Economists emphasize the more-telling, four-week moving average because it smooths out anomalies due to holidays, strikes and weather-related layoffs.
Despite the latest hopeful sign, 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. A year ago, initial jobless claims totaled 556,000, the four-week moving average was at 566,500 and continuing claims totaled 6.04 million.
States also reported 4.51 million people claiming Emergency Unemployment Compensation (EUC) benefits for the week ending Aug. 21, the latest week for which data are available, a decrease of 35,365 from the prior week. A year ago, 3.16 million people claimed EUC benefits.
Back to a Downtrend?
The highest insured unemployment rates for the week ending Aug. 21, the latest week for which data are available, were in Puerto Rico, 5.9%; New Jersey, 4.6%; Pennsylvania, 4.6%; Oregon, 4.5%, and California, 4.4%.
With the current jobless claims report, the labor market has registered two straight substantial declines for the first time since early summer. Moreover, the hope is that after a rise that was boosted in part by seasonal layoffs, jobless claims will now keep trending in the right direction -- down, aided by an ongoing economic recovery.