Jobless Claims Decrease, Surprising Economists

Contrary to economists’ predictions, the number of jobless claims declined last week, making it the lowest number of claims in four months.  The number dropped from 402,000 claims to 395,000, suggesting that the greatest difficulty in the job market can be attributed to a lack of hiring, as opposed to mass layoffs.  Many experts believe that one of the primary reasons employers aren’t hiring is that they can’t find the right people for their available positions.  In other words, employers need to find a better way to find relevant job seekers.

After the claims were released yesterday, the Dow Jones industrial average closed up 423 points, suggesting that the good news boosted stocks.  Jobless claims below 375,000 generally indicate a stable job market, so the fact that jobless claims are currently under 400,000 is promising for the future.  However, the economy only added 117,000 jobs in July, compared to the 204,000 average for the first four months of 2011, so we need so see a considerable improvement in the number of jobs added in August.