Initial jobless claims for unemployment benefits in the U.S. dropped for the second week in a row, to their lowest level in seven months, according to the U.S. Department of Labor.
Initial claims stood at 390,000 last week, falling 10,000 below the expected figure of 400,000 predicted by a Reuters survey. The previous week's figures was revised up to 400,000, an increase of 3,000.
Today's report is a positive sign for the state of the labor market in the fourth quarter, John Herrmann, a senior fixed-income strategist at State Street Global Markets LLC in Boston told Bloomberg. The economy remains very exposed to potential turbulence in the euro zone, but at least the economy is growing at a decent clip. Job retention is pretty high. Businesses have been very carefully managing their headcount.
A Labor Department official told Reuters an unusual pre-Halloween snow storm may have kept many potential claimants at home the week ending Nov. 5.
Key 4-Week Moving Average Drops to 400,000
The four-week average of claims, much less susceptible to volatility -- and freak snow storms -- dropped to the magic threshold of 400,000, approaching the 375,000 figure many economists believe signals significant progress.
Economists emphasize the more-telling 4-week moving average, as it smooths-out anomalies due to holidays, strikes, and weather-related layoffs, etc.
The figures arrive a week after October's job report showed the U.S. economy added 80,000 new jobs, with September and August's claims revised substantially higher.
The reduced number of new claims remains a positive sign for the economy, but sustained drops are needed over the long term.
We need claims to stay below the 400,000 level for some time before we can be sure there's improvement, Sean Incremona, a senior economist at 4Cast Inc. in New York, told Bloomberg Businessweek. There's still a lot of work to be done. The pace of hiring isn't enough to significantly reduce the unemployment rate.