Weekly jobless claims back below 400,000

Weekly initial jobless claims fell for the second month in a row, declining a steep 36,000 to 383,000 in the latest week,  well below the consensus forecast, the lowest reading in over two years, and nearly 100,000 below where it stood just two weeks ago.

The 4-week moving average dropped 16,000 to 415,500, and continuing claims slipped 47,000 to 3.89 million.



The sharp drop in weekly claims over the past two weeks would normally be viewed as excellent news and a strong signal the economy continues to accelerate.

But abnormally harsh winter weather has played a huge part in the volatile claims data, rendering the numbers practically useless in determining recent trends.

Bloomberg News noted, “The Labor Department said weather effects, which delay the filing and processing of claims, are unwinding in a comment that suggests the latest level may be free of distortion.”

If this is the case, the data are signaling further economic strength.  But a snowstorm and bitterly cold temperatures that affected a large portion of the country last week temporarily closed some unemployment offices and may have hindered others from filing.

Having the luxury of playing Monday morning quarterback in regards to the recent volatility, it’s probably a good idea to wait on filings over the next week or two in order to determine whether this week’s strong showing is legitimate or partly weather related.

Nonetheless, I remain optimistic that the economic picture is improving and expect claims to settle below 400,000. But as already mentioned, the weather is playing havoc with this key piece of data.