It's been quite a long time since initial unemployment claims reached a level this low. How long? Nearly six years.
Signaling a slower pace of layoffs, the number of people who applied for new jobless benefits fell 15,000 to 320,000 in the week that ended Aug. 10, hitting the lowest level of initial claims since October 2007, according to government data released Thursday. Economists surveyed by MarketWatch had expected a claims level of 333,000, matching an original estimate for the prior week. On Thursday, the government slightly revised the initial claims level to 335,000 for the week that ended Aug. 3. The average of new claims over the past month, a more reliable gauge than the volatile weekly number, fell 4,000 to 332,000, also reaching the lowest level since the weeks leading up to the start of the Great Recession.
Seasonal changes over the summer months can affect these totals, but even taking this caveat into consideration, when claims drop this low, it's encouraging.
To reiterate the point I make every Thursday morning, it's worth remembering that week-to-week results can vary widely, and it's best not to read too much significance into any one report.
In terms of metrics, when jobless claims fall below the 400,000 threshold, it's considered evidence of an improving jobs landscape, and when the number drops below 370,000, it suggests jobs are being created rather quickly. At this point, we've been below 350,000 in 14 of the last 19 weeks.
Above you'll find the chart showing weekly, initial unemployment claims going back to the beginning of 2007. (Remember, unlike the monthly jobs chart, a lower number is good news.) For context, I've added an arrow to show the point at which President Obama's Recovery Act began spending money.