Continuing jobless claims rise to record 6.14 million
Continuing claims rose 93,000 to an all time high of 6.14 million, the U.S. Labor Department announced Thursday, as more Americans found it hard to find new employment amid the nation's worst recession since the 1981-82 recession. Continuing claims are now more than double what they were a year ago.
Meanwhile, initial jobless claims increased 27,000 to 640,000 for the week ending April 18, the Labor Department said. Economists surveyed by Bloomberg News had expected this week's initial jobless claims to total 636,000. The one outlier: the four-week moving average decreased 4,250 to 646,750.
Focusing on four-week average
Economist Peter Dawson told DailyFinance Thursday the new, record high in continuing claims was no surprise, so he's telling investors to emphasize that dip in the four-week moving average.
"The only bright spot, and the one I'm emphasizing, is the dip in the four-week average for jobless claims. If that stat continues to decline, it could mark that new jobless rolls have peaked, which would be a very positive data point," Dawson said. "Labor market conditions are still weak at more than 640,000, but what we can say at this juncture is that it appears the upward momentum in jobless claims is stalling."
Economists note that the high continuing claims level reflects labor market stress and the long time it takes for those downsized to find comparable employment. Few companies are filling vacancies, many major corporations have announced large layoffs and even temporary work assignments are declining.
Keep in mind many economists believe the continuing claims statistic actually under-represents the number of long-term jobless citizens. If a laid-off person stops looking for work because he or she can't find suitable employment, they're no longer counted as unemployed. Many economists say if this category was included, continuing claims would be 10 to 15 percent higher, taking the number up to well over 700,000.
Nomura Securities International Economist Zach Pandl is not as optimistic as Dawson regarding current labor market trends, arguing that several more months of eye-sore data is likely.
"Claims are consistent with deep job losses for at least several more months," Pandl told Bloomberg News Thursday. "Weakness in the labor market and its knock-on effect on income really is the main hurdle for a sustained recovery."
Economic Analysis: Very weak job market conditions persist, but, as noted, economists are keeping an eye on the four-week moving average -- a more-telling indicator than the initial jobless claims stat (if not the continuing claims number), as it smooths-out anomalies for holidays, strikes, etc. If the four-week average maintains a steady downtrend, that would be a positive for the U.S. economy -- not a sign for investor to hit stock "Buy" buttons across the board, but a signal that the job loss momentum is abating.