Initial jobless claims fall; ongoing claims again hit record

WASHINGTON (MarketWatch) -- First-time claims for state unemployment benefits fell to the lowest level since late January, the Labor Department reported Thursday, in what may be a sign that a peak for pink sheets has passed.

The number of initial claims in the week ended May 2 fell 34,000 to stand at 601,000. The four-week average for first-time claims also fell, down 14,750 to 623,500. The four-week average is considered a better gauge of labor market conditions than the volatile weekly figures because it smoothes out one-time distortions caused by holidays, bad weather or strikes.
"The evidence is growing that the recession may be bottoming out in the second quarter," wrote analysts at RDQ Economics in a research note. "Companies may have begun to slow the rate of layoffs, but there is no evidence here that the pace of hiring has picked up."

Reported weekly, claims are one of the best tools for spotting turning points in the economy. A moderation in claims could mean that the pace of deterioration in the labor market is slowing.

However, the Labor Department also reported Thursday that the level of ongoing claims for jobless benefits continues to tally record highs, with a gain of 56,000 to reach 6.35 million in the week ended April 25. The four-week moving average of continuing claims also hit yet another record high, rising 125,250 to 6.21 million.
The U.S. insured unemployment rate, which represents the portion of all workers covered by unemployment insurance who are collecting benefits, rose to 4.8% -- the highest level since December 1982 -- from 4.7%.

Initial claims represent job destruction, while the level of continuing claims indicates how hard or easy it is for displaced workers to find new jobs. The latest claims report shows that finding a replacement job remains difficult.
On Friday, the government will report nonfarm payrolls for April, and economists are looking for a drop of 580,000, compared with March's contraction of 663,000.
On Wednesday, the ADP employment index showed that private-sector employment fell by an estimated 491,000 jobs in April, signaling that the economic downturn is moderating. See full story.