Jobless Claims Hold at 4-Year Low of 351,000

Claims for U.S. jobless benefits held at 351,000 after falling for three straight weeks and the four-week moving average continued to decline. Economists expect the Federal Reserve to raise interest rate sooner if jobless claims stay near 350,000 per week or fall substantially.

The four-week moving average of first-time applications for unemployment-insurance benefits -- which smoothes out weekly fluctuations -- tumbled to 359,000, a decrease of 7,000 from the previous week's revised average of 366,000.

In the week ended Feb. 18, applications for unemployment-insurance payments was unchanged at 351,000, the lowest since March 2008, according to data from the Labor Department issued Thursday. Economists polled by Reuters called for an increase of 7,000.

Jobless claims have registered below the key 400,000 mark -- a level historically associated with an improving labor market -- for 15th consecutive weeks.

Claims have also been an excellent leading indicator of monetary policy tightening, Joe LaVorgna, chief economist at Deutsche Bank, pointed out in a research note.

The minutes of the Federal Open Market Committee's latest policy meeting on Jan. 24-25 reaffirmed the central bank's decision to keep the target range for the federal funds rate at rock bottom levels at least through late 2014, he said.

In the past, when claims made a sustained break through 350,000 to the downside, the Fed raised interest rates soon thereafter, LaVorgna said.

What also makes Thursday's report particularly important is that last week included the 12th of the month, which coincides with the period the Labor Department conducts its survey for the February employment report. That report will be released March 9.

Continuing claims -- which include people filing for the second week of benefits or more -- dropped by 43,750 to 3,392,000, in the week ended Feb. 11. That's the lowest level since August 2008.

The continuing claims figure does not include the number of Americans receiving extended benefits under federal programs.

The four-week moving average was 3,453,250, a decrease of 43,750 from the preceding week's revised average of 3,497,000.

However, experts also warn that the initial jobless claims report doesn't tell the whole story.

We are clearly not out of the woods with economic recovery, nor with job creation, said Jim Finkelstein, president and CEO of FutureSense Inc., a San Rafael, Calif. consulting firm.

Finkelstein said people need to be equally concerned with the underemployed.

What ends up happening is that when people re-enter the work force, they are often taking jobs that require fewer competencies than they might have, Finkelstein said. While they are off the unemployment rolls, they enter this underemployed rolls. And that to me is more problematic in terms of the malaise of the American worker.