The economy has been battered by bad news this week. Housing has fallen to new lows and manufacturing continues to slow. But welcome news from the Labor Department may be signaling some stability in labor market. A bit of caution is in order, however: new trends cannot be established from one piece of data, as jobless claims can be volatile on a week-to-week basis.
Weekly initial jobless claims tumbled from an upwardly revised 504,000 last week to 473,000, below the consensus view of 495,000. The 4-week moving average remains in an upward trend, however, rising 3,250 to 486,750.
At 473,000, claims are still above the average since the beginning of the year of about about 465,000, and the general trend has not been favorable, as evidenced by the chart above and the 4-week moving average, which smoothes away some of the volatility seen in the weekly number.
Though the drop may just be a one week respite, the decline is welcome news amid what has felt like a deluge of unexpectedly weak data in recent weeks.
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