Fewer workers filed claims for unemployment insurance last week than at any time in the past five years as employers are confident enough to retain current employees.
First time applications for jobless benefits dropped 4,000 to 323,000 in the week ended May 4th, according to the Labor Department in Washington. It was the fewest since the second week of January 2008 and the first return to pre-recession levels. Economist had forecast 335,000 new claims. The prior week’s applications were revised 3,000 higher to 327,000. The four-week moving average fell to 336,750, the lowest since November 2007.
Jobless claims tend to fall before hiring picks up as employers maintain current employment levels before seeking additional workers. Claims are now at or below the point where firms have historically begun to hire. there has been some acceleration in the number of new jobs in the non-farm payrolls survey, with 165,000 new jobs in April, an average of 206,000 per month in the first quarter and 208,700 in the fourth quarter of 2012, all an improvement on the 152,000 average in the third quarter of last year and the 108,000 average in the second quarter.
The unemployment rate also sank to a four year low in April at 7.5%. However, the underemployment or U-6 rate, listing those working part time instead of full and those who wood like to work but are not actively looking, rose to 13.9% in April form 13.8% and average weekly hours for all employees fell to 34.4 hours form 34.6. The labor force participation rate remained at 63.3 its modern era low.
Chief Market Strategist