The number of people filing for first time unemployment benefits surged in the latest week, crossing the 500,000-claim level for the first time since September 2001, according to the US Department of Labor. Claims jumped by 32,000, to 516,000, after an upwardly revised reading from the prior week. Economists were expecting 482,000 new claims for the week. Initial claims running consistently atop the 350,000 mark would signal some weakening in the labor market. Claims above 400,000 are seen by many as a signal of recession.

Having witnessed extremely volatile measurements in the past few weeks, it is wise to consider the four-week moving average of initial claims, which smooths out one-time factors such as bad weather or holidays. The four-week moving average was also higher, to 491,000. That is the highest level since March 1991.

It is pretty obvious now that businesses are laying more employees off, and at a faster pace, and that the unemployed are having a tougher time looking for a replacement job. A year ago, initial claims were at 338,000.

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