Unemployment Claims Reach 5-Year Low

The job market appears to be on the rise as first time unemployment claims fell to a 5 year low. In a report that was better than expected the Labor Department reported that roughly 324,000 people filed initial claims of unemployment.

Experts had been prepared for jump in unemployment numbers, but were pleasantly surprised the number was 18,000 claims lower than it had been the previous week. First-time unemployment claims haven't been this low since January 2008, according to CNN.

Weekly figures can be a bit scattered so economists use a four week average in order to give themselves a more stable look at the numbers. In this case, the four week average was also down.

Tom Simons, an economist at Jefferies LLC, warns that the economy isn't out of the woods yet.

"Employers are not necessarily shedding workers, but they are not necessarily enthusiastic about adding to payrolls either," Simons said. "It's because of the low level of growth in the economy, and some caution about the future of fiscal policy."

John A. Challenger, from the outplacement firm Challenger, Gray & Christmas, was also skeptical about what the jobless numbers mean given the context of a slow economy.

"The economic slowdown that began late in the third quarter and is expected to turn into another summer slump has yet to result in increased or widespread downsizing," Challenger said. "The biggest concern is that consumers, who had been holding up the economy for so many months, are starting to scale back their spending as wages continue to stagnate."

Another statistic that might temper some enthusiasm is the number of people continuing to receive jobless benefits rose to 3.02 million, according to Bloomberg. That number only includes people who are within the traditional length of unemployment benefits, not the workers who are receiving extended benefits though federal programs.

The number of people receiving federally extended benefits shrunk by 12,600 this past week. There are still 1.78 millions collecting extended benefits because all of their traditional benefits ran out.

The Labor Department will release its monthly report for April on Friday. Economists surveyed by Bloomberg are predicting the numbers to reflect a positive outlook for the economy with payrolls growing by 145,000.

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