Initial unemployment claims drop to 330,000, a five-year low

Initial claims for unemployment insurance dropped by 5,000 to a seasonally adjusted 330,000 in the week ending January 19, the lowest level since January, 2008. The four-week moving average, a measure that smooths out volatility, was 351,750, dropping by 8,250 from the previous week's revised average of 360,000.

A word of caution is in order on the seasonal adjustments:

The decline may reflect the government's difficulty adjusting its numbers to account for layoffs after the holiday shopping season. Layoffs spike in the second week of January and then plummet. The department seeks to adjust for those seasonal trends, but the figures can still be volatile.

If numbers like these continue past the volatile weeks of January, though, it would be a very good trend. Generally speaking, initial claims below 375,000 and definitely below 350,000 signal strong job creation. Again, though, we have to wait to see what happens as seasonal adjustments become less of a factor.