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Initial Jobless Claims Drop Slightly

The US Labor Department reported Thursday that initial jobless claims fell last week, though they remained above the 400,000 mark which economists say they must be under to make a significant dent in the national unemployment rate.  Claims fell 6,000 from the prior week to 403,000 after the previous week's figure was revised upwardly to 409,000.  The overlying trend is on the way down, as well, as the four-week moving average of claims, a measure designed to smooth out the volatility in weekly data, fell for a fourth straight week to 403,000.  That figure was 422,250 just a month ago.

There is some disagreement among economists about the level of initial claims needed to sustain job growth, as some view 400,000 as the key level but others insist that claims need to fall below 375,000 and stay there.  And claims have not been below the lower level since February.  Economists have been keeping a closer eye on unemployment reports in recent weeks as fears have grown that we are headed for a double-dip recession.  Layoffs, and applications for unemployment benefits, are typically seen rising at the onset of an economic downturn, so the decline, while low, is seen as a good sign.

Earlier this year, supply chain disruptions sparked by the March 11th earthquake and tsunami that rocked Japan led to a slowdown in production in a number of manufacturing sectors, particularly the auto industry.  That slowdown and the ensuing layoffs, combined with surging gas prices, led to a slowdown in consumer spending, prompting a number of economists to begin worrying about a second recession even as we're still trying to recover from the nation's worst since the 1930s.

Auto production has resumed normal levels over the last few weeks and gas prices have come down from their summer peak levels.  Economists predict that those factors likely boosted third-quarter economic growth to about a 2.5 percent annual rate.  That's a vast improvement over the tepid 0.9 percent growth rate reported for the first half of the year, but not enough to make a significant impact on the beleaguered job market.

Over the last five months, US employers have added an average of just 72,000 jobs per month, well below the level of 100,000 jobs per month which economists say is necessary just to keep up with population growth.  And, it's less than half of the average creation rate of 180,000 seen in the first four months of the year.