Jobless benefit applications drop to seven-month low
The number of people applying for jobless benefits fell last week to the lowest level in seven months, suggesting slow but gradual improvement in the U.S. labor market.
Initial claims for unemployment compensation fell 5,000 to a seasonally adjusted 388,000, the Labor Department said Thursday. Applications from two weeks ago were revised up to 393,000 from an original reading of 390,000.
Economists surveyed by MarketWatch had expected new requests for jobless benefits to climb to 397,000 in the week that ended Nov. 12.
The average of new claims in the last four weeks, meanwhile, fell 4,000, to 396,750, also the lowest level since early April. The four-week average is seen as a more accurate gauge of labor trends because it irons out volatility in the week-to-week data.
The number of initial claims has gradually fallen from a 2011 high of 478,000 in late April to below the symbolic 400,000 mark. Economists generally believe that claims under that level signify faster job creation. The failure of claims to fall quickly below that level, however, indicates that the pace of hiring is improving slowly.
The U.S. economy added just 80,000 net jobs in October, according to the government’s initial estimate. That’s less than the number of jobs needed to absorb the natural increase in the labor force and falls far short of what’s required to slash the nation’s 9% unemployment rate.
Economists say the U.S. would have to average 250,000 additional jobs a month for several years to bring the jobless rate back down to pre-recession levels of around 6%.
Some economists contend that the decline in claims should translate into faster job growth in the months ahead. Ian Shepherdson of High Frequency Economics asserts that every 10,000 drop in the monthly average of claims is followed by about a 25,000 increase in payrolls.
But Yelena Shulyatyeva, an economist at BNP Paribas, said that seasonal adjustments in late fall skew the claims data and that the recent decline should be treated with caution.
“We saw a similar downward drift in initial claims last fall owing to lower-than-usual seasonal layoffs that were not matched by an acceleration in payrolls,” she said.
About 6.77 million people received some kind of state or federal benefit in the week that ended Oct. 29, down 62,378 from the previous week. Total claims are reported with a two-week lag.
The federal government offers extended compensation to millions of Americans whose state benefits have expired. Benefits in most states last six months.
Bartash writes for MarketWatch.com/McClatchy.
