New unemployment benefits claims plunge, but the good news may be temporary

Initial weekly unemployment benefits claims plunged for the week ending July 10 to a seasonally adjusted 429,000; a decrease of 29,000 from the previous week’s initial claims number of 458,000, and the lowest since August 2008.

The four-week moving average for new unemployment applications was 455,250, a drop of 11,750 over last week’s revised average, and the lowest reported since May.

The drop, though, could be only temporary. According to a Department of Labor analysis, it was due primarily to US automakers, including GM, forgoing their regular summer shutdowns, as well as other manufacturers delaying temporary lay offs.

The decrease in initial claims is offset by an upsurge of 247,000 continuing claims for the week ending July 3, bringing that figure to about 4.7 million. The four-week moving average for the number of continuing claims is up 22,000 to about 4.6 million – the highest seen since mid-June.

The report comes weeks after Congress failed to extend emergency unemployment benefits, which provide up to 99 weeks of payments, and ran out on June 2. Some 2.2 million people’s emergency unemployment checks have run out since then.

Unemployment dropped to 9.5 percent in June, from 9.7 percent the previous month. Some 14.6 million Americans remain out of work, according to the Department of Labor.