Weekly Jobless Claims Drop Proves to Be Short-Lived

Weekly applications for U.S. unemployment benefits jumped 46,000 last week to a seasonally adjusted 388,000, the highest in four months. The increase represents a rebound from the previous week's sharp drop. Both swings were largely due to technical factors.

Mark Ralston | AFP | Getty Images Unemployed Americans attend a National Career Fair

The Labor Department says the four-week average of applications, a less volatile measure, fell slightly to 365,500, a level consistent with modest hiring.

Last week, California reported a large drop in applications, pushing down the overall figure to the lowest since February 2008.

This week, it reported a significant increase as it processed applications delayed from the previous week. (Read More: Why Jobless Claims May Not Be as Good as Market Thinks.)

A department spokesman says the seasonally adjusted numbers "are being distorted ... by an issue of timing."

Many economists believe a reading below 400,000 points to an improving labor market. The four-week moving average of new claims, which smoothes out volatility and is considered a better measure of labor market trends, rose just 750 last week to 365,500.

"Improvement in the labor market will continue to be fitful and slow," said Joseph Trevisani, a market strategist at Worldwide Markets in Woodcliff Lake, N.J.

Applications are a proxy for layoffs. When they decline, it suggests hiring is improving.

Via : CNBC

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