Another Big Drop for Initial Jobless Claims

America's labor market got more good news as initial jobless claims unexpectedly plunged 24,000 to 435,000 for the latest reporting week. A Bloomberg survey had expected claims to total 450,000. The previous week's total was revised 2,000 higher to 459,000.

In perhaps better news, the four-week moving average sank another 10,000 to 446,500. Economists emphasize this more-telling measure because it smooths out anomalies due to holidays, strikes and weather-related layoffs.

Continuing claims also fell, by an additional 86,000 to 4.30 million. Some of the decline in continuing claims reflects Americans whose benefits have been exhausted, but it also reflects Americans who have found work. A year ago, initial claims totaled 507,000, the four-week moving average was at 523,000 and continuing claims totaled 5.68 million.

One Notable Setback

States also reported 3.82 million people claiming Emergency Unemployment Compensation (EUC) benefits for the week ending Oct. 23, the latest week for which data are available, a decrease of 162,460 from the prior week. A year ago, 3.52 million people claimed EUC benefits.

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The latest report did show one setback: The pattern of "lower highs" for states posting weekly increases in jobless claims continued to slow last week. Four states reported large increases, up from three last week: California, 6,387; Kentucky, 2,901; Wisconsin, 2,644; and Oregon, 2,296.

The highest insured unemployment rates for the week ending Oct. 23, the latest week for which data are available, were in Puerto Rico, 6.1%; Alaska, 5.2%: California, 4.1%; Oregon, 4.1%: Pennsylvania, 4%; and Nevada, 3.9%.

It's unlikely that initial claims will keep declining at a 20,000-plus pace per week, but steady drops of 4,000 to 7,000 would represent another sign of subsiding layoffs and a U.S. economy that's starting to demand more employees. Not until jobless claims regularly slide below 400,000 will economists and investors have confidence that commercial activity is increasing at a healthy job-creating pace.