Economists surveyed by Bloomberg had predicted new claims would total 443,000. The previous week's figure was also revised higher by 3,000, to 437,000.
The four-week moving average rose just 2,000 to 456,000. Economists prefer to focus on this measure because it smooths out bumps in the data caused by holidays, strikes, weather-related layoffs and other anomalous events. Continuing claims, though, fell by another 42,000 to 4.34 million. Some of the decline in continuing claims comes from people who have exhausted their benefits, but some of it is also due to people finding work.
The initial 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 522,000, the four-week moving average was 526,500 and continuing claims totaled 5.75 million.
Online Want Ad Growth Slows
Separately, the Monster (MWW) Employment Index fell 2 points to 136 in October -- its third decline in four months. Although the index, which measures job demand based on want ads placed online, rose on a year-over-year basis for the ninth straight month, October's 13.3% year-over-year growth rate is lower than the 21% rate recorded this summer. Monster also said all 28 metro areas it tracks showed an increase in jobs posted online in October, on a year-over-year basis.
The pattern of lower highs for the states posting weekly increases in jobless claims slowed somewhat last week. There were three large-increase states, up from one last week: California, with 3,755; Illinois, with 3,710; and Pennsylvania, with 2,256.
The highest insured unemployment rates for the week ending Oct. 16 were in Puerto Rico, 5.8%; Alaska, 5%: California, 4.1%; Oregon, 4.1%: Pennsylvania, 4.1%; and New Jersey, 3.9%.
This week's jobless claims report exemplifies why economists concern themselves more with the four-week moving average: It's perilous to place too much emphasis on the weekly initial claims statistic. A revised 17,000 drop in last week's report was entirely wiped out by this week's 20,000-claim surge, and the difference could have been caused by any of a number of idiosyncratic factors -- such as a delay in a filing by one state or the Columbus Day holiday.
So, keep an eye on the moving average, which over the past two months has trended the right way: down.