The number of people filing for first-time unemployment benefits last week dropped to the lowest rate in five years, according to the government. It’s another sign that the economy may be picking up speed.
The number of individuals filing for jobless benefits fell 37,000 to 335,000 in the week ended Jan. 12, the Department of Labor reported. The last time numbers were this low was Jan. 19, 2008.
Economists say the stabilization of new claims is usually a good indication that the labor market is strengthening and that businesses could be gearing up to hire more aggressively, but at least one expert is skeptical.
JP Morgan economist Daniel Silver is concerned that the data may be due to an “adjustment issue” and may not be a reliable indicator for the labor market.
“The seasonal adjustment process that the Department of Labor uses often has a hard time correctly anticipating the seasonal swings in the non-seasonally adjusted data that occur around the holidays, which often generates volatile readings for the seasonally adjusted data,” Silver said.
Due to dramatic swings that often take place in the weekly numbers, economists tend to view the four-week moving average number as a more reliable economic indicator. New claims during the last four weeks also were down, falling 6,750 to 359,250. The year-ago total for this same period was 380,250.
On an unadjusted seasonal basis for the week ended Jan. 5, 14 states reported a decrease of more than 1,000 persons filing new claims. Officials from New Jersey, Pennsylvania, Ohio, Massachusetts and Vermont referenced fewer layoffs in the construction, education, manufacturing and transportation industries as the reason.
Michigan had the largest decrease in initial claims with a drop of more than 12,0000, driven by fewer layoffs in the construction industry.
The unadjusted numbers for states reporting increases showed that some states had more substantial increases, a contrast to the overall findings. New York reported an increase of 37,189, citing layoffs in the transportation, construction and educational service industries. Other states reporting substantial increases were Georgia, with 15,354, and North Carolina, with 13,606. Texas, California, South Carolina and Alabama all had at least 7,000 new claims each.