May 19, 2014
Jobless claims recently fell to their lowest level in seven years, and this development could show the latest progress made by the labor market.
Unemployment claims fall to 7-year low
These applications for benefits fell to a seasonally-adjusted rate of 297,000 during the week ending May 10, according to Labor Department figures. This number was the lowest for these weekly claims since May 12, 2007, when they also reached 297,000.
Jobless claims beat expectations
The jobless claims figure was lower than the prediction of any economist participating in a Bloomberg poll. The actual number also came in below the 320,000 new applications forecast by a Wall Street Journal survey.
The Labor Department also revised its claims data for the prior week upward by 2,000 to 321,000. The four-week moving average, which many consider to be less volatile, dropped by 2,000 to reach 323,250.
These recent developments could be part of a broader trend, as the latest monthly data from the Labor Department showed that U.S. employers added a net 288,000 positions in April. This represented some of the most robust jobs growth since the recession ended. As a result of these new positions, the jobless rate fell to 6.3 percent in April.
Jobs growth could sustain momentum, predicts expert
Ian Shepherdson, economist for Pantheon Macroeconomics, predicted that jobs growth could remain strong in May, according to The Wall Street Journal. He forecast that if unemployment claims keep moving lower, employers might create 250,000 new jobs this month.
Brian Jones, senior U.S. economist at Societe Generale in New York, commented on the positive developments when speaking with Bloomberg.
"The way the job market continues to improve, the number of people collecting benefits keeps going down," Jones told the news source. He predicted that the weekly claims would total 303,000. "The labor market is fine."
Claims figures could become more even soon
Jobless claims figures have fluctuated substantially in recent weeks, reeling from the impact of events like Passover, Easter and school spring breaks, according to Reuters.
Amid this situation, some weeks provided particularly high data, and others yielded rather low figures, The Wall Street Journal reported. One market expert noted his optimism during these fluctuations.
"Through the volatility, the data remain highly encouraging," Jim O'Sullivan, chief U.S. economist at High Frequency Economics, told the news source.
How a strengthening job market impacts consumers
If the economy continues to improve, this situation could benefit consumer sentiment significantly. If these individuals feel more confident in business conditions, they will likely do more to seek out credit.
This development could provide a boon to loan sales by increasing the supply of the debt involved in these transactions.
Financial institutions that want to get involved in loan sales might consider contacting Garnet Capital Advisors, which has substantial experience in this area.