It’s Halloween, but there are no goblins in today’s labor market report. New filings for unemployment benefits fell again last week, slipping 10,000 to a seasonally adjusted 340,000. That’s still at an elevated level relative to recent history, but we’re again moving in the right direction. The data glitches that harassed this series over the past month or so are receding. In turn, we’re left with the encouraging sight of claims returning to a downward trend, or so it appears. Exhibit A is the 7% year-over-year decline in claims for the week through October 26. That’s the biggest slide since late-September and it suggests that the labor market, although wobbly these days via recent updates on payrolls, continues to grow.
The analysis today would be of a different view altogether if we saw a rise of any significance in today’s claims summary. By that standard, we dodged a bullet. One weekly report doesn’t mean much, of course. But the sight of moderately bigger year-over-year declines in each of the past three weeks holds out the possibility that the economy’s capacity to mint jobs at a modest pace will survive the various hazards that plagued October.
It’s worth noting that there were no states in today’s report with increases of more than 1,000. By contrast, 13 states posted declines of 1,000-plus last week, led by California’s hefty 13,033 drop, reportedly due to “fewer layoffs in the service, wholesale trade, and retail trade industries,” according to the Labor Department.
Even if this leading indicator is again leaning in a positive direction, we’re still left to grapple with an old problem that’s been with us all along. Scott Brown, chief economist at Raymond James & Associates, reminds us (as if we could forget) that “the issue for the market is job creation. We’re not really making up what we lost during the recession.”
True, but it’s also accurate to say that the odds for improvement on this front would be a lot lower if jobless claims start trending higher. For the moment, that’s one risk factor that seems less frightening on All Hallows’ Eve.