New claims for jobless insurance benefits in the United States tumbled in the past week, official data showed Thursday, highlighting ongoing improvement in the critical labor market.
The seasonally adjusted initial claims in the week ending February 6 were down to 440,000, a decrease of 43,000 from the previous week’s revised figure of 483,000, a Labor Department report said.
The latest claims reading was much better than the forecast of most economists of around 465,000, as the world’s largest economy emerges from its worst recession in decades with unemployment posing a key challenge.
Claims had been elevated over the last several weeks, and this latest level is more in line with the general downward trend that has persisted for the past year, analysts said.
“This is the first pleasant surprise in the claims numbers for some time,” said Ian Shepherdson, chief US economist for High Frequency Economics.
“After several weeks of uncertainty, data are pointing to gradual labor market firming,” agreed Andrew Gledhill, an economist in the Moody’s Economy.com.
Initial claims were kept artificially low in late December and early January because of holidays, and then high in late January as the Labor Department caught up with processing new claims, he said.
“This latest reading is more in line with a slow improvement. It is not indicative of a sturdy labor market recovery, as layoffs remain elevated.”
For stability, layoffs will need to slow further, which would be initial claims around 400,000, Gledhill said.
The Labor Department said that the four-week moving average for the jobless insurance claims, a less volatile indicator than the week-to-week figures, was 468,500, a decrease of 1,000 from the previous week’s revised average of 469,500.
The latest data also showed that the total number of Americans receiving unemployment benefits fell to the lowest level in more than a year.
The number of seasonally adjusted insured unemployment during the week ending January 30 was 4.538 million, a decrease of 79,000 from the preceding week’s revised level of 4.617 million.
A new White House economic forecast showed Thursday the US economy is set to start producing job growth this year at a rate of 95,000 per month, but that the unemployment rate will remain high.
President Barack Obama’s annual economic report to Congress said the economy is on the verge of pulling out of a period of steep job losses stemming from the worst recession in decades.
But the report also said that the unemployment rate may not come down much from the current level of 9.7 percent, and may even rise because of labor market growth and the return of more discouraged workers to the labor force.
Shepherdson said it was possible that at least some of the drop in claims for jobless insurance benefit reflected the current severe cold weather, which could depress claims again next week.
“In short, the underlying trend is hidden by the noise, and it likely won’t become clear for another few weeks,” he said.
In addition, while businesses are comfortable enough to slow layoffs, hiring has not yet resumed with any vigor, noted Gledhill of Moody’s Economy.com.
