The number of people filing for first time unemployment benefits fell to a 1-month low in the latest week, but was still firmly entrenched in the 500,000-claim level, according to the US Department of Labor. In the week ending November 29th, claims fell by 21,000, to 509,000, coming off its highest levels since 1992. This was a surprise, as economists were expecting 540,000 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 spiked higher, to 524,500. That is the highest level since January 1983.

It is pretty obvious now that businesses are laying more employees off, and at a faster pace, and that the unemployed are having a tougher time looking for a replacement job. A year ago, initial claims were at 340,000.

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