The number of people filing for first time unemployment benefits dropped significantly but continued in recessionary levels for the week ending October 4th, according to the US Department of Labor. Claims fell by 20,000, to 478,000, after an upwardly revised reading for the prior week. Economists were expecting 480,000 new claims for the week. Initial claims running consistently atop the 350,000 mark would signal some weakening in the labor market. Claims above 400,000 are seen by many as a signal of recession.

Having witnessed extremely volatile measurements in the past few weeks, it is wise to consider the four-week moving average of initial claims, which smooths out one-time factors such as bad weather or holidays. The four-week moving average was higher, by 8,250 in the latest week, to 482,500.

A year ago, initial claims were at 316,000.

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