The July 4 holiday week provided a surprising boost to America’s job market as the number of Americans filing for first-time unemployment benefits fell to a four-year low.
About 350,000 people filed for initial jobless claims in the week ended July 7, down 26,000 from the previous week, according to the Bureau of Labor Statistics. The figure marks the lowest level of claims since March 2008. Economists had been expecting 375,000 claims last week.
The news comes after last week’s disappointing monthly non-farm payroll jobs report and at a time when the government jobs statistics have emerged as a key battleground for the 2012 election.
The US economy added just 80,000 new jobs in June, according to the latest non-farm report. The figure is well below the 100,000 that economists calculate the economy needs to stand still and less than half the 200,000-plus the jobs market was adding each month in the winter.
Jobless claims are a closely watched economic indicator, correlated with layoffs, and while the latest weekly figures were better than expected, analysts cautioned that factors including the July 4 holiday for example, could have distorted the figures.
BTIG chief global strategist Dan Greenhaus also pointed out that seasonal shutdowns in the auto-industry may also have played a part in boosting the number. This year fewer car plants closed, in part to keep up with growing order. “We absolutely do not believe this is a ‘real’ number,” he wrote in a note to clients.
The jobless claims numbers have, however, fallen for three weeks in a row and the four-week moving average of claims, seen as a more-reliable measure, fell by 9,750 to 376,500 – its lowest level since late May.
Last week’s monthly figures were a blow to President Barack Obama who said the pace of recovery needed to pick up. “It’s still tough out there,” he told reporters after the numbers were released.
Mitt Romney, Obama’s Republican challenger, called them a “kick in the gut”.