Yesterday’s data report on US initial claims for unemployment insurance showed a decrease by 14,000 to 442,000, representing a larger drop than expected.
Interestingly, as shown in the graph below, the numbers have come full circle since the Lehman (LEHMQ.PK) collapse. After the parabolic rise that peaked a year ago, the 4-week moving average of initial claims is back at its September 2008 levels.
The report is positive on the face of it and seems to indicate a still-troubled labor market making slow progress. However, as Bill King (The King Report) highlights:
… a decline in jobless claims is not necessarily a sign of a turnaround in employment because an inordinate number of unemployed people would exhaust their jobless benefits.
In the absence of credit extension being restored, I am not holding my breath for companies to start employing in a hurry.
(Click to enlarge)
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