Yesterday’s data report on US initial claims for unemployment insurance showed a decrease by 14,000 to 442,000, representing a larger drop than expected.
Interestingly, as shown in the graph below (courtesy of Business Insider – Chart of the Day), the numbers have come full circle since the Lehman collapse. After the parabolic rise that peaked a year ago, the 4-week moving average of initial claims is back at its September 2008 levels.
The report is positive on the face of it and seems to indicate a still-troubled labor market making slow progress. However, as Bill King (The King Report) highlights: “… a decline in jobless claims is not necessarily a sign of a turnaround in employment because an inordinate number of unemployed people would exhaust their jobless benefits.”
In the absence of credit extension being restored, I am not holding my breath for companies to start employing in a hurry.
Source: Business Insider – Chart of the Day, March 25, 2010.
