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Weekly jobless drop celebrated far too soon

By Catholic Online (NEWS CONSORTIUM)
October 18th, 2012
Catholic Online (www.catholic.org)

While some were ready to break out the champagne to celebrate a drop in U.S. jobless claims the other week, it all appears it was just premature. Weekly applications for U.S. unemployment benefits jumped 46,000 last week to a seasonally adjusted 388,000, the highest in four months. The increase displays a rebound from the previous week's precipitous drop. Both swings were largely due to technical factors.

LOS ANGELES, CA (Catholic Online) - The Labor Department says the four-week average of applications, a less incendiary measure, fell slightly to 365,500, which is a level more consistent with modest hiring.

California reported a large drop in applications last week, pushing down the overall figure to the lowest since February 2008.

California reported a significant increase this week as it processed applications delayed from the previous week.

A department spokesman disappointedly admitted that the seasonally adjusted numbers "are being distorted ... by an issue of timing."

Many economists believe a reading below 400,000 points to an improving labor market. The four-week moving average of new claims is considered a better measure of labor market trends. It rose just 750 last week to 365,500.

"Improvement in the labor market will continue to be fitful and slow," Joseph Trevisani, a market strategist at Worldwide Markets in Woodcliff Lake, N.J. says.

Applications are a proxy for layoffs for when they decline, it suggests hiring is improving.

The prior week's figure was revised up to show 3,000 more applications than previously reported to 342,000. Some recent reports suggest the economy is picking up.

Retail sales grew in September at a progressive pace. And builders started construction on new homes and apartments last month at the fastest pace in more than four years.

The economy is not growing fast enough to generate much hiring. Growth slowed to a tepid annual rate of 1.3 percent in the April-June quarter, down from 2 percent in the previous quarter.

Most economists see growth staying at or below 2 percent in the second half of the year.

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