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. For the week ending June 1, the four-week moving average also rose, moving from 345,500 to 349,000, the first increase in several weeks.

Two weeks ago I discussed several indicators of unemployment and concluded that perhaps everyone who wanted a job already had one (maybe not the job they wanted but, nonetheless, a job). In that article I questioned how much further down unemployment claims could go.

Well, last week's results seemed to answer the question. Claims rose by 1000 and the four-week moving average only declined by 500.

And this week's results were the clincher, with claims rising by 9,000 and the moving average rising by 3,500.

It's way too soon to tell whether the claims data of the past two weeks represents the beginning of a new uptrend. But, there's no question that, at the very least, a temporary hiatus has been reached in the downmove that began on March 30.

Perhaps the recent claims data is telling us that the economy has indeed reached a state of "full employment". If this is so, then further upward changes in the rate of economic expansion will be hindered because there will be no employees available to fill newly created jobs.

Byline: Lafferty (MF Merlin)