One Jobs Number That's Almost Back to Normal

A rundown of what the low level means, and why the labor market still has a long way to go.

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Thursday morning, the Labor Department reported that initial jobless claims last week fell to 326,000, down slightly from the previous week's 328,000. The movement is small, but during the recovery, the headline jobless claims number has moved substantially.

Why it's encouraging: This part is obvious – the number of people who are just joining the unemployment lines is less than half of its weekly maximum of 670,000 in spring 2009. That signals the people who want jobs are increasingly finding them.

Why it's not necessarily great news: The number of weekly initial claims has held relatively steady for a few months, but has only once in the last year dipped below 300,000, where it had been pre-recession. The current level of jobless claims means the economy will add only around 175,000 jobs in January, as Steven Ricchiuto, chief economist at Mizuho Securities told the Los Angeles Times – that's only a moderate level.

More importantly, a low initial claims number does not capture the total number of people on unemployment insurance, a figure that has also recovered rapidly, though that recovery can be misleading. As people exhaust their state unemployment benefits, this figure will likewise fall off, though it won't necessarily mean an improved labor market.

What it means: If the job market is continuing to heal, look for the coming Thursdays' initial claims to stay low. But that's only half the battle – people who are not on unemployment insurance, whether because they've given up looking for a job or because they've exhausted their benefits (or both) will have to also get back onto payrolls. Given a sagging labor force participation rate, that could take a while.

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