First Time Jobless Claims Drop 16K

Initial jobless claims are down a sharp 16,000 in the May 14 week to 278,000 but the 4-week average is up sharply, 7,500 higher to 275,750. The May 14 week is the sample week for the May employment report and comparisons with the sample week of the April employment report point to easing strength in the labor market. Initial claims were at an historic low 248,000 in the April 16 sample week (which is a very sizable 30,000 below the latest reading) with the 4-week average at 260,750 (which is 15,000 below).

Continuing claims are mixed, down 13,000 in the lagging data for the May 7 week to 2.152 million but with the 4-week average up 5,000 to 2.143 million. These rates are roughly in line with April's trends. The unemployment rate for insured workers is unchanged at 1.6 percent.

The Labor Department has not been citing any special factors over the past couple of months though Verizon's strike of 40,000 communications workers may be a hidden wildcard for both this report as well as the monthly employment report.

Recent History Of This Indicator:
Big improvement is expected for initial jobless claims which spiked higher in the prior two reports. Forecasters see claims falling 19,000 in the May 14 week to 275,000. The latest week will be watched closely as a leading indicator for the May employment report as the May 14 week was also the sample week for the monthly report. But a comparison with the April sample week is very tough, a week when initial claims came in at an historic low of 248,000. Yet a comparison of 4-week averages is also valuable and here May has a chance with the April comparison at a less imposing 260,750 and still within reach of May's trend.