Jobless Claims in U.S. Fall More Than Forecast to 409,000, Reversing Surge

May 19 (Bloomberg) -- Fewer Americans than forecast filed applications for unemployment benefits last week, making it more likely that the surge in April was caused by temporary events rather than a deterioration in the labor market.

Jobless claims declined by 29,000 to 409,000 in the week ended May 14, Labor Department figures showed today in Washington. The median estimate of economists in a Bloomberg News survey called for a drop to 420,000. The number of applications were the lowest in a month.

Declining firings and gains in hiring are helping sustain consumer spending, which accounts for about 70 percent of the economy, even as food and fuel costs increase. While payrolls have climbed for seven consecutive months, a jobless rate close to 9 percent underscores the need for a pickup in employment that will spur growth.

“We have essentially come full-circle and are unwinding the run up in April,” said Michael Englund, chief economist at Action Economics LLC in Boulder, Colorado. “The labor market is slowly improving. It allows slow, but positive growth in consumer spending.”

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http://noir.bloomberg.com/apps/news?pid=20601010&sid=aObz.Zc4bYgs

in the states has affected this number. Since the RepubliCON Governors have made changes to the amount of benefits, how much you want to bet there is some hidden language in the legislation that whittles down eligibility too. Besides most people who are fired today are not eligible for unemployment even under normal standards.

We were running below 400,000 in February and March, and a weekly number of 409,000 neither supports the idea that April's claims increases are transitory nor reversed.

This is a hopeful headline rather than an accurate one.

not much of a rise not much of a fall expect this for months and years unless we change course.

http://www.ows.doleta.gov/press/2011/052611.asp

This week's is 424,000, and last week's was revised up to 414,000. Next week the 4 wk moving average will drop, because we'll get rid of the one big week, but it's still going to be significantly above 400K.

01/01/2011 418,000
01/08/2011 437,000
01/15/2011 415,000
01/22/2011 443,000
01/29/2011 424,000
02/05/2011 391,000
02/12/2011 420,000
02/19/2011 384,000
02/26/2011 375,000
03/05/2011 405,000
03/12/2011 390,000
03/19/2011 394,000
03/26/2011 392,000
04/02/2011 385,000
04/09/2011 416,000
04/16/2011 404,000
04/23/2011 431,000
04/30/2011 478,000
05/07/2011 438,000
05/14/2011 414,000
05/21/2011 424,000

We were really doing much better, and then all of a sudden in April things changed.

temporary jobs? It appears we are entering another cycle of temporary jobs over the summer, but if my guess is right we will see a similar surge by August.

I'd say we are in the early stages of another contraction.

The epic fall in Chicago PMI for May is the largest since fall of 2008....

Same deal. Fuel prices, inflation, worsening margins, less spending money for consumers.... Businesses pull back a bit, and that's all it takes to start the downward cycle.

We'll see what the employment report looks like on Friday. The reason I concentrate on the household survey in times like this is that there are tons of imputations in the establishment survey, and those imputations can make the survey unreliable during times of rapid change.

Edit to add:

I am concerned about the rise in initial claims mostly because I think initial claims are currently understated due to many persons not qualifying for benefits. Also last month's treasury receipts showed a definite change in trend, so I suspect the establishment survey is the false indicator here.

according to Bernanke who also claims gas prices
are transitory. I tried to tell that to the gas station
cashier but she would not give me the "stable" price, and
insisted on the transitory price of $4/gallon.

I was talking to a gas station attendant last week, and he told me that he couldn't afford to drive to work any more....

... most of the media grasps at every single tiny little positive while ignoring the millions of negatives. Every tiny uptick is the start of the glorious recovery and every downtick is just an anomoly.

I did not catch the details.

Now 400,000 is supposed to be good.

Initial UI claims haven't been below 200,000 since 1969. The lowest under Clinton was 259,000 with an average of 328,525 new claims a week (and he did have about 4 weeks above 400,000). Source: Dept of Labor

Only 150,000 jobs created, and that was not enough.

However last week's number was revised up from 424,000 to 428,000.

Four week average only fell to 425,500, which is bad because we dropped the one surge week out:
http://www.ows.doleta.gov/press/2011/060211.asp

That 409,000 figure didn't mean anything.

01/01/2011 418,000
01/08/2011 437,000
01/15/2011 415,000
01/22/2011 443,000
01/29/2011 424,000
02/05/2011 391,000
02/12/2011 420,000
02/19/2011 384,000
02/26/2011 375,000
03/05/2011 405,000
03/12/2011 390,000
03/19/2011 394,000
03/26/2011 392,000
04/02/2011 385,000
04/09/2011 416,000
04/16/2011 404,000
04/23/2011 431,000
04/30/2011 478,000
05/07/2011 438,000
05/14/2011 414,000
05/21/2011 428,000
05/28/2011 422,000

It's not looking very good.