WASHINGTON (1/17/14)--Initial jobless claims dropped for the first full week of 2014, indicating continued labor market improvement.
First-time filings fell by 2,000 to 326,000, according to Labor Department data published Thursday. Initial claims for the week ending Jan. 4 were revised down, to 328,000 from 330,000.
Moody's said the number was "slightly higher than we anticipated" (Economy.com Jan. 16), while a Dow Jones poll of economists predicted 331,000 claims (The Wall Street Journal Jan. 16).
The four-week moving average of initial claims fell by 13,500 to 335,000--pushed by decline of 19,000 over the past two weeks. Moody's said that the measure appears to be stabilizing after the traditionally volatile holiday season, but said that another week of data will be required to make a more confident analysis. The Wall Street Journal pointed out that many companies let holiday employees go in the first week of January.
Labor Department data also showed continuing claims increased to 3.03 million for the week ending Jan. 4. A four-week moving average of the measure rose to 2.908 million from 2.87 million.
The number of people on emergency benefits rose 63,626 to 1.35 million for the week ending Dec. 28--the day that the program ended. Moody's predicted that Congress' continued failure to reinstate these benefits will hold back real GDP growth this year by between 0.1 and 0.2 percentage points. A deal to restore the program fell through Tuesday.
The ratings and research firm also said that the withdrawal of benefits may explain the contraction of the labor force that drove December's 0.3% unemployment rate drop, to 6.7%. It expects the labor force to continue to shrink in January, and predicts that trend will shave an additional 0.2% off the unemployment rate.
Signs of long run labor market improvement include people on extended benefits numbering just 145--a drop of three on a weekly basis and about 850 on an annual basis. The number of Americans on emergency unemployment benefits when they ran out was down by more than 700,000 on an annual basis. Initial claims not seasonally adjusted were also down 4% on a year-over-year-basis.
States reporting the biggest drop in first-time claims for the week ending Jan. 4 were Michigan, New Jersey and Massachusetts. Those reporting the largest increase were New York, Georgia and South Carolina.