For the last five months, the number of Americans who filed for unemployment benefits rose significantly. However, the trend does not really signal a deterioration in the labor market as the trend which underlies it remained very consistent with conditions that are tightening. This news can be very alarming for the Americans who have just completed their college degrees and are out hunting for jobs. Unprecedented lay-offs also happen to most companies and the workers who are not warned are left looking for another job.
Initial claims for unemployment benefits increased to about 13,000 to a seasonally adjusted figure of 282,000 in the first week of December. This is the highest level since the early July as the Labor Department has informed the public. The claims in the prior weeks were unrevised. The claims data tend to be very volatile this time of the year as observed by market analysts. The four week moving average of the corresponding claims considered to be a better measure of the labor market trends as it gradually strips the week to week volatility and rose only by about 1,500 to reach 270, 750 last week. The claims have now been below the threshold of 300,000 which is usually associated with the healthy labor market conditions for now 40 straight weeks. This is the longest recorded ever since the early 1970s. The labor market now approaches full employment and there is almost little room for further decline in this aspect.
An analyst in the Labor Department said that there were really no special factors that influence the data and that only claims for Louisiana had been estimated as the state is now currently implementing a new computer program or system. The resiliency in the labor market is now likely to give the Federal Reserve confidence in raising interest rates in the following days for the very first time in almost ten years although there is a slowdown in the consumer spending as well as the housing market activities. Last week, the government reported that the economy added only 211,000 jobs last month. The unemployment rate was kept at a 7.5 year low of 5 percent. The claims report also showed the number of those who still receive benefits after an initial aid increased by about 82,000 to 2.24 million in the week ending November 28. The four week moving average of the continuing claims rose to about 2.18 million. Many companies are affected by this shift including Paper Mart.