Today’s weekly update on initial jobless claims suggests that the labor market is finally turning (or will soon turn) for the better. Maybe. For the first time in nearly two years, seasonally adjusted new filings for jobless benefits totaled less than 430,000. We’ve seen this movie before only to end up with disappointment, as we’ve been discussing (such as here, for instance). Will it be any different this time? For today, at least, it’s easier to answer “yes.”

As the chart below suggests, the momentum now looks set to shift to the side of growth. Can we believe it? There’s reason to wonder, given the recent history. New jobless claims have been moving sideways this year, raising worries that the labor market’s rebound was fizzling. Today’s report provides fresh hope that job creation may stronger than it appeared.

“We’ve been waiting for the day that this number creeps toward 400,000, and it looks like that’s finally where we’re headed,” Craig Thomas, senior economist at PNC Financial Services, tells CNNMoney.com today.
But there are caveats (as always) for reading too much into any one number. As the AP reports:

Normally, such a sharp drop in jobless claims would be seen as a positive sign that the job market is improving. But economists will need to see the downward trend continue for several more weeks before drawing conclusions.

Another concern is that the latest drop may be the result of temporary seasonal factors. A Labor Department analyst said manufacturing companies reported fewer temporary layoffs than usual this time of year. General Motors said last month that it would forgo its customary two-week summer factory closings, which it uses to retool plants for new car models.

That usually causes a spike in temporary layoffs and jobless claims in early July. Other manufacturers also reported fewer temporary layoffs than expected, the analyst added.

Last week’s drop “is very encouraging,” Jennifer Lee, an economist at BMO Capital Markets, said in a note to clients. “But it likely won’t last” because much of it was due to seasonal factors.

It doesn’t help expectations to learn that unadjusted weekly claims jumped by nearly 49,000 to more than 513,000 last week. Seasonal factors are an issue, perhaps more so than usual these days. The trick is deciding if the fine print is bullish or bearish.