Jobless claims fell sharply during the week ended May 14 to 409,000, down 29,000 from the prior week. That result, while directionally encouraging, remains above that important 400,000 level.
Claims had moved markedly higher over the past month, driving the 4-week moving average to nearly 438,000. These most recent results mark the first time since early April that the weekly results came in below the steadily rising 4-week moving average. Moreover, this marks the second consecutive week that claims declined meaningfully over the prior week. While it’s too early to definitively state that upward trend has been broken, both figures are encouraging.
The employment market remains in a state of flux. Private sector job creation has been relatively strong in the past three months, even as the public sector continues to shed jobs in response to broad budgetary issues. The unemployment rate is slowly trending lower, but job creation will need to continue at a brisk pace to offset the impact of discouraged workers re-entering the workforce.
It’s quite possible that we may see the pace of job creation slip in the months ahead as the economy has slowed and may slow further from here. If that occurs, we anticipate that the jobless rate could easily continue to trend higher and jobless claims may struggle to break materially lower from these levels until the economy stabilizes and re-gathers some momentum.