Jobless Claims Fall Back

Initial jobless claims fell 53k to 357k in the week ended April 5, 26k more than expected and the most since September 2005. The decrease follows a large increase of 39k the prior week, with claims reaching their highest since September 2005, which was impacted by Hurricane Katrina. Excepting that month, claims a week ago were at their highest since September 2003.

The latest week's decline is not a major surprise. Last week I noted in response to the large increase in claims that the timing of the Easter holiday, which occurred at its earliest since 1913, made seasonal adjustment difficult.

Seasonal factors expected a 1.3% decrease in claims, but they increased 8.9%, or 28,181, meaning that the seasonal adjustment to last week's data boosted the claims tally by 28,181.

For the current week, seasonal factors expected a large 19.2% increase, which means that roughly 70k claims were subtracted from the raw data, bringing the headline figure lower.

Still, the two-week average is 374k, which represents an acceleration from the trend of the prior month when claims averaged 352k. If this trend holds, monthly payroll losses will likely accelerate from the 77k average of the past three months to a range of over 150k.

Although jobless claims are elevated, they remain below what levels seen during the past two recessions. During the 1990-1991 recession, they averaged 430k per week, and that tally occurred when the population was much lower. During the 2001 recession, claims averaged 416k, which equates to closer to 440k today.

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Tony Crescenzi is the chief bond market strategist at Miller Tabak + Co., LLC, and advises many of the nation's top institutional investors on issues related to the bond market, the economy and other macro-related issues. At the request of the Federal Reserve, Crescenzi is a regular participant in the board's Livingston Survey of economic forecasters. He is also the author of the revised investment classic, The Money Market, first published in 1978 by Marcia Stigum, and The Strategic Bond Investor. At the time of publication, Crescenzi or Miller Tabak had no positions in the securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Crescenzi also is the founder of Bondtalk.com, a popular Web site covering the bond market and the economy. Crescenzi appreciates your feedback; click here to send him an email.

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