New Jobless Claims Fall for 2nd Straight Week. Continuing Claims Higher

Declines in the labor market appear to have moderated for the second consecutive week, as 545,000 Americans filed for initial claims for unemployment benefits in the week ending Sept. 12. That’s the lowest level since early July, but it's not a reason to be too optimistic. 

The weekly figure is far above what is needed to show any stabilization in the labor market, but the trend is in the right direction. The previous week’s figure was, unfortunately, revised up 7k to 557k, but that’s still below the 4-week average of 563,000. For the jobs market to be in stabilization mode, weekly claims need to be more in the 370k range.

Some may be skeptical of the data as it comes from a four-day week, which in the past has turned out be inconsistent with other data. Moreover, the other half of the report was disappointing.

Continuing claims, or the number of people still receiving weekly jobless benefits, climbed 129k to 6.23 million in the week ending Sept. 5.

“This was much higher than the market consensus for a print of 6.1 million, and suggests that the duration of unemployment remains quite high, despite the recession being on its proverbial last legs,” commented Ian Pollick from TD Securities. 

The total tally including emergency and extended benefits fell for the third straight week. The latest data, for Aug. 29, shows 9.013 million Americans receiving jobless assistance. 

John Herrmann, analyst at Herrmann Forecasting, said the data is consistent with the unemployment rate ticking up from 9,7% to 9.8%, “with a small possibility of a rise to 9.9%.” Looking farther ahead, he said the rate “should grind up to just over 10.30% by the end of March 2010.”

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