Initial Unemployment Benefit Claims Plunge

Last week, 565,000 people filed inital claims for unemployment benefits--a drop of 52,000 from the previous week, when 617,000 claims were filed, the Labor Department reported this morning. The four-week moving average, used to smooth out this volatile weekly data, fell by 10,000.

It's good news, but don't read too much into it, says Joshua Shapiro, chief U.S. economist at MFR, in a morning note.

From Shapiro:

The median forecast for the current week’s seasonally adjusted result called for a decline to 603,000. The reported outcome was therefore considerably lower than market expectations. However, as we warned, results in holiday weeks are often substantially skewed by imprecise seasonal adjustment, and we would caution against reading much (if anything) into this report.

The percentage of workers eligible for unemployment benefits who are now collecting them rose 0.1 percentage point to 5.1 percent.

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