Jobless Claims Report 06/18/2009

Finally some good news…

The Labor Department said Thursday that the total unemployment insurance rolls fell last week by 148,000 to 6.76 million, the largest drop in more than seven years and an indication that layoffs may be easing (or may be that excessive capacity is shrinking to a level where “easy” layoffs are no longer possible).

Also, the initial claims rose 3,000 to a seasonally adjusted 608,000 last week, above analysts’ expectations. The four-week average fell by 7,000 to 615,750.

The drop in continuing claims could signal a slowing in the rise of the unemployment rate (which means we haven’t bottomed out yet, and there is more bad news to come), which reached a 25-year high of 9.4 percent in May. Many economists forecast the rate could reach 10 percent by the end of the year (that could be the bad news).

Economists also are closely watching the level of first-time claims for signs the economy will recover by mid-summer (which I believe is a highly optimistic view of current trends), as many analysts predict.

First-time jobless claims are a measure of the pace of layoffs and are seen as a timely, if volatile, indicator of the economy’s health. Initial claims stood at 390,000 a year ago (remember, they are at 608,000 right now, so a long way to go back to the normal levels around 400K).

Among the states, Pennsylvania (followed by Florida, Ohio, California, New York, Puerto Rico, Wisconsin, Arizona and Nebraska) reported the largest increase in initial claims for the week ending June 6. (I wonder where is Michigan in all this, oh… I forgot, MI already has the highest unemployment rate in the country, so not many jobs to lose anymore… and I’m seeing this first hand).

So I were I (which I am), I would not put all my hopes on getting a job very quickly. Another couple of months in hibernation could cool things down.