Jobless Claims Plunge by 42,000 to 346,000

In the week ending April 6, the advance figure for seasonally adjusted initial claims was 346,000, a decrease of 42,000 from the previous week's revised figure of 388,000. Expectations were for claims to drop to 360,000. The plunge in new claims is good news indeed. The 4-week moving average was 358,000, an increase of 3,000 from the previous week's revised average of 355,000. While the recent non-farm payroll report showed a disappointing number of new hires, at 88,000 vs. expectations of job gains of 190,000, other employment data, including Thursday's jobless claims report, don't show quite as much weakness. One of them is the number of job openings, and we received Tuesday the Job Openings and Labor Turnover Survey (or JOLTS report, as it is commonly known), and that report indicated the highest number of new job openings since May 2008. Specifically, the number of jobs posted by companies increased to 3.9 million in February from 3.6 million in January. Since it often takes a month or two (or even longer in the current environment) to fill an open position, it may turn out that the March payroll report was an aberration, and not the start of a new trend of weaker employment. The drop in jobless claims this morning may reinforce this fact, and may mean that the Fed, which includes a number of indicators in its measure of labor market conditions, may not be on hold as long as some investors may have thought following the jobs report. Of course, we will need to for confirmation through subsequent jobs reports, noting that the next Fed meeting occurs before we have another payroll report. Returning to the unemployment claims data, the advance unadjusted number for persons claiming UI benefits in state programs totaled 3,266,392, a decrease of 84,488 from the preceding week's revised level of 3,350,880. A year earlier, the rate was 2.7 percent and the volume was 3,470,104. Some of the drop may be explained by the unemployed gaining employment, but some may have transitioned to the longer-term unemployment compensation programs, extended and emergency benefits. States reported 1,837,554 persons claiming EUC (Emergency Unemployment Compensation) benefits for the week ending March 23, an increase of 37,929 from the prior week. There were 2,794,553 persons claiming EUC in the comparable week in 2012. EUC weekly claims include first, second, third, and fourth tier activity. Including the regular state benefits, the extended benefits and the emergency unemployment benefits, the total number of people claiming benefits in all programs for the week ending March 23 was 5,277,512, a decrease of 10,573 from the previous week. Some of these people may have found jobs, while others may have seen their benefits expire. There were 6,952,894 persons claiming benefits in all programs in the comparable week in 2012. These include both extended benefits and emergency unemployment compensation. Extended Benefits were available only in Alaska during the week ending March 23. The highest insured unemployment rates in the week ending March 23 were in Alaska (5.5 percent), Puerto Rico (4.3), California (3.8), New Jersey (3.8), Rhode Island (3.8), Connecticut (3.7), Pennsylvania (3.7), Wisconsin (3.6), Massachusetts (3.5), and Montana (3.5). The largest increases in initial claims for the week ending March 30 were in Pennsylvania (+3,015), New Jersey (+2,409), Illinois (+2,149), Kentucky (+1,718), and Wisconsin (+1,583), while the largest decreases were in Texas (-3,489), California (-2,661), North Carolina (-1,601), Arkansas (-1,221), and Connecticut (-774).