For the week ending September 21, the DOL reported Thursday, seasonally adjusted initial claims were 305,000. That's down 5,000 from the previous week's revised figure of 310,000, originally reported as 309,000. The four-week moving average, which most analysts prefer because it flattens volatility in the weekly figure, was 308,000, down 7,000 from the previous week's revised average of 315,000. The last time initial applications were this low was in September 2007, three months before the Great Recession officially started.
For the comparable week of 2012, initial claims were 367,000.
During the past 40 years, the best 12-month period for initial claims was August 1999-July 2000 when the weekly average was 285,000. For the 12-month period ending September 14, 2013, the weekly average has been 359,000.
For decades, initial unemployment claims were seen as a reasonably good predictor of job growth, with 400,000 new claims being viewed as the level at which healthy expansion would occur. That number was in the past couple of years dropped to 370,000 as healthy growth failed to appear.
If the way we used to read that claims barometer held true, the monthly job report being released next Friday ought to show strong growth in new jobs. That is especially so since the government's third report released Thursday on growth in the gross domestic product for the April-June period was an annualized 2.5 percent. Consensus expectations were that it would come in at 2.2 percent.
But, over the past three months, seasonally adjusted job growth has only averaged 148,000, according to the Bureau of Labor Statistics, well below the 12-month average of 184,000. What's happening is that there are ever-fewer lay-offs but employers aren't hiring as much as would be expected.
So, to reiterate what I noted last week, unless the increase in new jobs starts moving up significantly faster, the value of the first-time claims number as a predictor of job growth has to be questioned.
For both state and the federal emergency unemployment compensation programs, the total number of people claiming benefits for the week ending September 7 was 3,921,399, up 22,769 from the previous week. For the comparable week of 2012, there were 5,173,998 persons claiming benefits in all programs. The drop in total claims is a function of people exhausting their benefits, finding jobs or dropping out of the labor force. Benefit checks have been cut an average of 11 percent because of the federal sequester and several states have also reduced weekly compensation as well as reduced the allowable number of weeks an individual can collect.