There was excellent news on the labor front this week as the federal government reported that initial jobless claims plunged another 34,000 to 407,000, and both the four-week moving average and continuing claims metrics extended their downward trends.
Economists surveyed by Bloomberg had predicted initial jobless claims would decline far less impressively to a total of 435,000. The previous week's total was revised 2,000 higher to 441,000.
The four-week moving average declined 7,500 to 436,000. Economists consider the moving average to be the more useful statistic because it smooths out bumps in the data caused by holidays, strikes, weather-related layoffs and other anomalies. Continuing claims fell another 142,000 to 4.18 million. Some of this decline comes from people who have exhausted their benefits, but some of it is also due to people finding work.
Jobless claims are now nearing a key threshold that suggests ongoing labor market healing. If initial jobless claims drop below 400,000 during the next two quarters, that would give economists and investors confidence that commercial activity is increasing at a pace that would prompt most companies to curtail layoffs and resume hiring.
A year ago, initial jobless claims totaled 477,000, the four-week moving average was at 503,750, and continuing claims totaled 5.51 million.
States also reported 3.8 million people claiming Emergency Unemployment Compensation (EUC) benefits for the week ending Nov. 6, the latest week for which data is available, a decrease of 160,191 from the prior week. A year ago, there were 3.58 million persons claiming EUC benefits.
Key Statistics Are All Trending Downward
In another sign of sustained labor market recovery, the trend of fewer states posting large increases in jobless claims resumed last week. There was only one large-increase state -- Indiana, with an increase of 2,094 -- down from five last week.
The highest insured unemployment rates for the week ending Nov. 13, the latest week for which data is available, were in Puerto Rico, 5.8%; Alaska, 5.7%: Oregon, 4.3%; Pennsylvania, 4%: and California, 3.9%.
This week's jobless claims report is incontrovertibly good news. Initial jobless claims plummeted, and the momentum suggests the nation should push below the 400,000 level in the quarter ahead, perhaps as soon as next month, further evidence that companies are curtailing layoffs. To be sure, the nation's ongoing productivity increases have limited hiring, but the ray of light in the jobless claims data is clear: Demand is now such that most companies feel that additional layoffs are not in their interest. If GDP growth strengthens in the quarters ahead, at least some companies will have to start hiring to meet that demand.