Economists surveyed by Bloomberg had predicted initial jobless claims would dip to 443,000. Last week's claims total was revised down 7,000 to 449,000. The four-week moving average also suffered a setback, rising 2,250 to 459,000. Economists prefer to focus on the four-week average, as it smooths out bumps in the data caused by holidays, strikes, weather-related layoffs, and other anomalous events.
The initial jobless claims rate will have to drop below 400,000 during the next two quarters before economists and investors will have 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 521,000, the four-week moving average was at 534,000, and continuing claims totaled 5.95 million.
Positive Trends in Employment Figures
Despite the unexpected rise in initial jobless claims, which can be volatile, there were two bright spots in the latest report -- emergency claims and the trend in state-level claims.
Further, state-level claims exhibited more evidence that the layoff trend is subsiding, as the pattern of lower highs for the states posting weekly increases in jobless claims continued. There were only two, large-increase states, but their totals were low: Pennsylvania, where claims rose 2,869; and New Jersey, where they were up 2,132. Increases in the remaining that had them states were low, with the top three being Georgia (up 1,361) Indiana (up 833) and Washington state (up 677).
Meanwhile, large weekly decreases in jobless claims were recorded in California (down 6,131) and Florida (down 5,357).
Overall, this week's labor report is a wash. Yes, initial jobless claims unexpectedly jumped, but state-level claims continue to furnish evidence that we have passed the peak in layoffs. U.S. job growth clearly remains inadequate, but at least the layoffs appear to be subsiding.