Unemployed workers filing jobless claims decreased by 6,000 in the last week, following a decline of 31,000 in the previous week, and continuing claims dropped 23,000, U.S. government figures released Thursday, September 2 show.
The lower level of jobless claims, while still higher than they would be in a strong economy, suggests that U.S. employers have reached a neutral point, neither hiring nor firing workers.
In the week ending August 28, according to the U.S. Labor Department, the advance figure for seasonally adjusted initial claims was 472,000, down 6,000 from the previous week's revised figure of 478,000. Claims in the week ended August 21 declined by 31,000 to 473,000.
A healthy economy usually sees claims drop below 400,000, and they reached a 2010 peak of 504,000 in mid-August. Economists' consensus was for a 2,000 rise in weekly claims to 470,000. The four-week moving average for August 28, which smoothes out the volatility of the weekly number, also was down at 485,500, a decrease of 2,500--the first decrease in a month.
In other economic news on Thursday, the U.S. Commerce Department's July factory orders report showed a slight gain of 0.1% after two months of decline. July's rise came entirely from a 12.9% jump in transportation orders, however, due to a surge in demand for commercial aircraft. Excluding the volatile transportation component, orders decreased 1.5%, the sharpest monthly decline since a 2.8% drop in March 2009.
As for continuing claims, the 23,000 decrease puts the level of people requesting unemployment benefits at 4.46 million for the week ending August 21. The four-week average for continuing claims is 4.485 million, down more than 100,000 from a month ago. A decline in continuing claims reflects both hiring and the expiration of benefits.
Companies Are Hesitant to Hire
"Right now, there's a huge degree of bearishness in the market," said Doug Roberts, chief investment strategist for ChannelCapitalResearch.com, Shrewsbury, New Jersey. "People are hesitant to hire. They're concerned about government regulations, and so we're seeing the rise of the so-called permanent temp. People are substituting full-time positions for temporary workers, and they're going to continue to do that while they can."
Friday's monthly U.S. jobs report from the Labor Department will be closely watched, as always, but it is of special interest now because of the elections coming up in November, Roberts noted.
"President Obama is now getting a more laser-like focus on the jobs number since we're coming into elections," he said. "So perversely, if the numbers significantly
decrease, you may also have the expectation for a positive balancing of the negative, because the Federal Reserve and the government may step in sooner."
Consensus for August U.S. Jobs Report Is Decrease of 100,000
Although recent economic data show that U.S. manufacturing has been holding up, high unemployment is a sticking point in the economic recovery. Prior to this Friday's August jobs report, which is anticipated to show 100,000 lost jobs for the month, market observers are watching employment-related news closely.
According to the ADP National Employment Report released Wednesday, September 1, private-sector employment decreased by 10,000 from July to August on a seasonally adjusted basis. The estimated change of employment from June to July was revised downward, from the previously reported increase of 42,000 to an increase of 37,000.
Surprisingly, company layoffs may have provided the most encouraging employment news for August.
U.S. companies announced 34,768 planned job cuts in August--a 10-year low, according to outplacement consultancy Challenger, Gray & Christmas. The cuts were 17% lower than the 41,676 cuts announced in July, marking the first decline after three months of increases. August 2009 job cuts totaled 76,456, 55% higher than this August. The 374,121 job cuts through August are down 65% from the 1,070,504 layoffs announced by this point in 2009.
Read about the Labor Department's July jobs report from the archives of InvestmentAdvisor.com.