Jobs Report Surprisingly Good

This morning, the Department of Labor released its monthly jobs report. During May, 345,000 jobs were lost and the unemployment rate reached 9.4%

The job loss was much better than anticipated: economists were expecting a loss of more than 500,000.

The four-month running average of the jobs number declined for the second straight month. When this value declines for four months, it has been a reliable indicator that a recession has ended. This is yet more encouraging news, suggesting that the severe recession begun during the Bush administration may be at an end.

Jobless Claims Continue to Decline

Initial jobless claims for the week ending May 30, 2009 were 621,000. This represents a decline of 4,000 from last week’s revised number. Continuing claims were 6,735,000, 15,000 les than last week’s number. This is the first time this number has declined during the current economic downturn.

In a previous post, I introduced what I call the “8-4 number”, which indicates how the four-week running average of initial jobless claims compares to the same value from eight weeks earlier. Based on an historical analysis, when this values declines for eight consecutive weeks, it indicates that a recession has ended. Currently, the value has declined for six weeks, giving hope that the current recession, begun during the Presidency of George W. Bush, may be at an end.

If next weeks initial jobless claims are less than 643,000, we will be one step closer to achieving this, and giving us a strong indication that the recession has ended.