Jobless claims trend paints bright side of labor market

WASHINGTON -- Federal Reserve Chairman Ben S. Bernanke on Wednesday took a pretty dim view of the employment situation, calling the gains uneven and unsatisfactory, as he announced an unexpected delay in pulling back on monetary stimulus.

But on Thursday morning, the Labor Department said 309,000 people filed for first-time jobless claims last week. That’s up 15,000 from a distorted undercount in the previous week, yet the latest tally was still one of the lowest in several years.

Even accounting for irregularities in the Labor Department’s data collection -- last week’s figures also may have been understated a bit because of Labor Day holiday closings -- there’s little doubt that the jobless claims trend has been a positive indicator for the job market. Bernanke said as much in his news conference Wednesday.

Over the last two months, new unemployment claims have drifted down to levels (between 322,000 and 337,000) last seen in the fall of 2007, just before the official start of the Great Recession.

The question is, how much do these weekly figures tell us about the prospects for the job market?

“It’s only half of the picture,” says Paul Ashworth, chief U.S. economist for Capital Economics. “You’ve got hiring and firing, and this is only [about] firing.”

That should give a little bit of comfort, or relief, to people who are employed, as job security remains a top concern among workers. Many companies are running with bare-bones staffing, so layoffs have receded sharply in recent years.

But the other side of the picture doesn’t look so good. Although corporate profits have been very strong, employers have been reluctant to ramp up hiring, which has held back job growth and worker mobility.

Moreover, with a large surplus of workers in the wings -- the unemployment rate stood at 7.3% -- most people aren’t seeing large raises. Average worker earnings have barely kept up with inflation. Seen in this light, the Fed’s decision to postpone a withdrawal of stimulus would seem to make a lot more sense.

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