Jobless claims inched higher last week but remain just above a five-year low, the Labor Department reports. That’s an encouraging sign for expecting that the economy will continue to post modest jobs growth in the foreseeable future. Claims have recently fallen to levels unseen for a number of years and the fact that these levels are holding suggests that the bias for expansion is still intact. Meantime, the four-week moving average of claims dropped to another post-recession low last week--another signal that tells us to think positively.
Yes, filings for jobless benefits rose 2,000 for the week through March 16 to a seasonally adjusted 336,000. But one small rise means little for this volatile series. It's the trend that counts. On that note, the four-week average slipped under the 440,000 mark for the first time since early 2008. Fewer people are losing their jobs, according to the data, and that's a bullish indicator for the economy.
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Reviewing the year-over-year changes in weekly jobless claims in unadjusted terms—before seasonal tweaks—looks encouraging too. As the next chart reminds, new claims continue to fall relative to year-earlier levels, at a 5%-to-10% pace, give or take. That's been typical for some time and it strengthens the argument that the labor market will continue to heal.
As usual, there are several risk factors lurking on the horizon that could derail the productive profile implied by jobless claims. From the ongoing economic struggles in Europe to the potential for sharp budget cuts in the US, there are several macro threats swirling about. But if there's a fatal turn ahead for the business cycle in the near term, the warning signs will start popping up in the numbers. So far, however, there are minimal signs of trouble. Today's jobless claims report is the latest example, although the upbeat trend in the data du jour has plenty of company, as Monday's broader review of the US economy reminds.