Initial jobless claims for the week ending February 11 fell to the lowest numbers in four years, a sign that employees are in greater demand than previous months and that business in the private sector is growing.

Last week, 348,000 people filed for unemployment. The last time these figures fell below 350,000 was September 2008, according to the Department of Labor.  These claims numbers were adjusted to account for seasonal trends in employment.

Jobless claims generally rise in the fourth quarter when employers reevaluate staffing needs and fall in the first quarter. Remarkably, these claims fell in both the fourth and first quarters bucking typical seasonal patterns, said John Herrmann, chief economist at Herrmann Forecasting. “What that means is that the underlying job environment is much healthier than what people had expected,” said Herrmann.

In comparison to the consensus estimate of 365,000, which was based on a Bloomberg survey of dozens of economists, the number of actual recorded claims showed a much sharper decline.  While these reports, are widely considered more erratic than similar measures recorded over longer periods, such as the Bureau of Labor and Statistics’ monthly household survey, the fact that these numbers have been declining for the last three weeks makes the downward trend more believable.

The 4-week moving average, which is seen as a more reliable indicator than the weekly claims figure, also showed a modest decline from 367,000 the week prior (Feb. 4) to 365, 250 claims (Feb. 11).  Like the claims numbers, the moving average is seasonally adjusted.

“This is cutting edge good news,” said Robert Brusca, chief economist at FAO Economics. The fact that numbers are “well-behaved”, showing a steady decline of 13,000 fewer claims than the week prior, (the week ending Feb 4.) instead of a more dramatic drop, actually makes the marker more credible.  “Nobody can quite understand why the jobs market would be improving and so everybody wants to deny it, but the facts relating to the job market from a variety of indicators using a variety of methods are pretty clear about what they’re saying.”

Putting the weekly claims figure of 348,000 in context, “a level around 300,000 is pretty normal for the U.S.,” said David Semmens, US Economist at the London-based Standard Chartered Bank. And while Semmens called the report “promising,” he is wary of being overconfident. “You really want to see the four-week moving average moving below that point [of 350,000] and then staying below that point, because just six weeks ago we were above the 400 mark,” said Semmens.

Since the recession began, 8.8 Million people have lost their jobs and in the private sector only 41 percent of those jobs have been recovered, said Herrmann.

As the labor market grows, we will see a positive shift in those economic indicators—such as consumer confidence—that have made some economists skeptical about a recovery, said Brusco.  “[I]f people have jobs, they have income and if they can spend then they will spend.  And if they spend that will underpin the economy and then we’ll have a reason to have more job growth,” he said.

Government support is critical to this cycle. If we have the continued support from the Federal Reserve and if payroll tax cuts remain in place, the market could average 160 to 175,000 new jobs per month this year and 200,000, next year, said Herrmann.  According to his estimates, this would allow the labor market to recover 80 percent of lost jobs.  “The idea is not just to recover all the jobs lost but then to create an environment that promotes job growth past that point as we go forward,” said Herrmann. By harnessing the momentum of the government’s support even as it’s withdrawn, businesses could recoup the final 20 percent of jobs on their own.

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