The total number of people on the unemployment insurance rolls dropped for the first time since early January, the government said today, while new claims for benefits rose slightly.
The report shows that job losses are easing after companies made deep cuts earlier this year. But it’s not clear whether recipients of unemployment insurance are finding new jobs or simply using up all their benefits, which typically last 26 weeks.
“It is unlikely that new hiring has picked up in any meaningful fashion,” Joshua Shapiro, chief economist with MFR Inc., a consulting firm, wrote in a report to clients. “More probable is that long-term unemployed are starting to fall off the rolls.”
The Labor Department said the total unemployment insurance rolls fell by 148,000, to 6.69 million, in the week ending June 6, the largest drop in more than seven years.
The drop also breaks a string of 21 straight increases in continuing claims, the last 19 of which were records. A dip in continuing claims several weeks ago was later revised higher.
Initial claims rose by 3,000, to a seasonally adjusted 608,000, in the week ending June 13, above analysts’ expectations. The four-week average, which smoothes fluctuations, fell by 7,000, to 615,750. Continuing-claims data lags initial claims by one week.
The four-week average is at its lowest level since mid-February, further evidence that the pace of job cuts is slowing.
In another encouraging sign, the Conference Board on Tuesday said its index of leading economic indicators rose for the second consecutive month in May after seven straight declines. The index rose 1.2 percent last month and by the same in amount in the six-month period ending in May, the first time that measure has grown since April 2007.
Conference Board economist Ken Goldstein said if those trends continue, a “slow recovery” should start before the end of the year, but he cautioned that the job market will take longer to rebound.
The drop in continuing jobless claims likely reflects the decline in first-time claims, meaning that fewer people are joining the rolls.
“Continuing claims … ought to be falling now given that initial claims peaked more than two months ago,” Ian Shepherdson, chief U.S. economist for High Frequency Economics, wrote in a report to clients.
The drop could also signal a slowing in the rise of the unemployment rate, economists said, which reached a 25-year high of 9.4 percent in May. Many economists forecast the rate could reach 10 percent by the end of the year.
The financial markets rose in morning trading. The Dow Jones industrial average added about 75 points, and broader indices also gained.
Still, millions of Americans are receiving unemployment compensation under an emergency federal program authorized by Congress last summer and extended by the Obama administration’s stimulus package.
First-time jobless claims are a measure of the pace of layoffs and are seen as a timely, if volatile, indicator of the economy’s health. Initial claims stood at 390,000 a year ago.
Job cuts are slowing. The Labor Department said employers eliminated 345,000 positions in May, about half the monthly average of jobs lost in the first quarter.