Weekly Jobless Claims See Lowest Level Since ’00, But Are Numbers Exaggerated?

The number of Americans filing for first-time jobless benefits plummeted for the week ended Jan. 24 to its lowest level since April 15, 2000.

Initial claims for state unemployment benefits dropped 43,000 to a seasonally adjusted 265,000, the Labor Department said on Thursday. It was the biggest weekly decline since November 2012.

However, the reported decline, which far exceeded economists’ expectations for a drop to only 300,000, is exaggerated. While the Labor Department claims “there were no special factors impacting this week’s initial claims,” the data included the Martin Luther King holiday, which means fewer claims were processed.

That’s not always the case.

Prior weekly jobless claim reports found the four-week moving average — which is considered a better indicator, as it irons out volatility — above 300,000 despite low eligibility. However, this week’s report reverses the prior weeks’ increases. The four-week moving average fell 8,250 last week to 298,500, still just slightly below 300,000 where it had been above for the prior weeks.

At the time, some economists dismissed that rise as “noise,” citing seasonal fluctuations at the start of the year. Now, most economists’ expectations are that this overly optimistic report resulted from the same difficulties, missing data and long-term unemployment further reducing eligibility for benefits.

The data come on the heels of a two-day policy meeting of the Federal Open Market Committee, which reiterated its position to hold interest at near historic low, and be “patient” until economic data suggests a more robust U.S. economy. They are likely to shrug off this report.

The claims report showed the number of people still receiving benefits after an initial week of aid fell 71,000 to 2.39 million in the week ended Jan. 17, largely due to a lack of eligibility. Further, the so-called continuing claims covered the period during which the government surveyed households for the unemployment rate.

Continuing claims fell 22,000 between the December and January survey periods, suggesting another decline in the jobless rate considering the 36-year low labor force participation rate. Unemployment, largely due to the shrinking work force, is currently at a 6-1/2-year low of 5.6 percent.

Veterans are still finding the labor market a difficult landscape to navigate in, as 1,779 initial claims were filed by newly discharged veterans. That’s a decrease of just 255 from the preceding week.

The largest increases in initial claims for the week ending January 17 were in Puerto Rico (+792) and the Virgin Islands (+25), while the largest decreases were in Pennsylvania (-13,194), New York (-12,255), Georgia (-10,173), Missouri (-7,082), and Wisconsin (-6,963).