Initial Claims for Unemployment Insurance Fall Below 400,000
This is good news. Initial claims for unemployment insurance fell below 400,000 last week:
In the week ending Feb. 5, the advance figure for seasonally adjusted initial claims was 383,000, a decrease of 36,000 from the previous week's revised figure of 419,000. The 4-week moving average was 415,500, a decrease of 16,000 from the previous week's revised average of 431,500.Via Calculated Risk, here's a chart of the four week moving average of claims since 2000:
Click on graph for larger image in new window.
As explained here, many analysts use a figure of 400,000 as the breakeven point for job creation. When claims fall below this value, employment begins expanding rather than contracting. However, this recent FRBSF Economic Letter cautions that the "take-up rate" for initial claims is unusually high in this recession, and that "recent declines in initial claims do not necessarily indicate a reduction in layoffs. Decreasing claims may also capture a decline in the take-up rate." However, since a decline in the take-up rate is itself an indication of a better labor market, even if this the reason for the decline it is still good news.
Update: I should also note that "A Labor Department economist said the latest decline was partly due to the continued unwinding of the weather effect," so there is additional uncertainty surrounding these numbers.