The Labor Department's Employment and Training Administration announced today that the number of new claims for state unemployment insurance for the week ending May 4 dropped another 12,000 to 336,000.

To smooth out the effects of short-term fluctuations in the weekly numbers, the Labor Department calculates and publishes a four-week moving average of first-time unemployment claims. This is obtained by adding up the weekly values for the past four weeks and dividing by four.

Last week I noted that the week-by-week plot of the four-week moving average broke below a several-month pattern of increasingly higher relative highs and lows. In other words, a long-standing uptrend in the four-week moving average had been broken. This week's drop in the raw weekly data pulled the value of the average down still further -- from 357,250 to 353,750. This is the lowest reading for the four-week average since last September. What's more, today's reported four-week average is 1.05 percent lower than the average for the same period a year ago. This is the first year-over-year decline in the last twelve months.

When you consider the performance of this indicator, along with the recent behavior of the Composite Index of Coincident Indicators, the National Association of Purchasing Management's latest report, and the results of yesterday's Federal Reserve Beige Book survey, it sure looks like the economy has put the Fed-engineered "soft landing" behind it, and is gradually regaining speed and altitude.

Byline: Lafferty (MF Merlin)