The latest jobless claims report demonstrates how volatile the data can be from week to week. The previous week's seasonally adjusted increase of 28,000 was followed by the latest week's drop of 17,000 to 421,000. A Bloomberg survey had expected claims to total 425,000 for the latest week. The Labor Department actually revised the previous week's total up by 2,000 more, to 438,000.
The more-telling, less-volatile four-week moving average declined again, by 4,000 to 427,500. Economists emphasize this measure because it smooths out anomalies due to holidays, strikes, weather-related layoffs and other one-time events.
Continuing claims also plunged by 191,000 to 4.09 million, a decline that reflects Americans whose benefits have been exhausted as well as those who've found work.
One Year Ago: 5.31 Million Continuing Claims
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. Each 10,000 drop in weekly initial jobless claims translates to about 25,000 new jobs created per month.
A year ago, initial claims totaled 483,000, the four-week moving average was 486,000 and continuing claims totaled 5.31 million.
States reported 3.71 million people claiming Emergency Unemployment Compensation (EUC) benefits for the week ending Nov. 20, the latest week for which data are available. That's an increase of 233,032 from the prior week. A year ago, 4.20 million people claimed EUC benefits.
The pattern of fewer states posting large increases in jobless claims resumed in the latest report. Two states reported large increases, down from five in the prior report: Wisconsin, with 7,545; and Iowa, with 2,789.
The highest insured unemployment rates for the week ending Nov. 20, the latest week for which data are available, were in Alaska, 6.1%; Puerto Rico, 5.5%; Oregon, 4.4%; Nevada, 3.9%; Pennsylvania, 3.9%; and California, 3.7%.
This latest labor market report is reassuring. After the prior week's noisy data skewed by a seasonal adjustment, new jobless claims declined more than expected in the latest week, and the four-week moving average extended its downtrend by a substantial amount. Combined with the decline in large-increase states, the three data points provide strong evidence that the nation's long period of outsize layoffs is subsiding.