First-Time Jobless Claims Continue Downward Trend

First-Time Jobless Claims Continue Downward Trend

07/03/2013 BY: MARK LIEBERMAN, FIVE STAR INSTITUTE ECONOMIST

First-time claims for unemployment insurance fell for the fourth time in the last five weeks, dropping 5,000 to 343,000 for week ending June 29, the Labor Department reported Wednesday.

Economists expected 345,000 claims. Claims filings for the week ending June 22 were revised up to 348,000 from the originally reported 346,000.

The number of persons continuing to collect unemployment insurance for the week ending June 22, reported on a one week lag, dropped 54,000 to 2,933,000. The prior week’s original report of 2,965,000 original claims was revised up to 2,987,000.

The four-week moving average of first-time claims dropped 750 to 345,500. The four-week moving average of continuing claims declined 9,500 to 2,969,250 for the period ending June 22.

The claims report was issued one day early because of the July 4 holiday, which gave analysts less time to review and confirm data from states. Data from states is typically reported to the Labor Department on the Monday of the week in which the report is released.

The report on new and continuing claims will have no impact on the monthly employment situation report for June, to be released by the Bureau of Labor Statistics (BLS) on Friday.

From mid-May to mid-June, the number of initial claims increased 11,000, while the four-week average of first-time claims went up 8,000, suggesting layoffs could be a drag on payrolls and the unemployment rate in the employment situation report.

Wednesday’s report wrapped up an encouraging second quarter, which saw an average of 345,538 first-time filings each week, down from 353,538 in the first quarter. For the first half of the year, initial filings averaged 349,538, down from 373,731 in the previous six months and from 375,615 in the first half of 2012. From an analytic perspective, the decline in claims filings—to below the theoretical “tipping point” of 350,000—means layoffs will be less of a drag on the monthly report on payroll jobs.

Economists have observed that 350,000 or fewer weekly first-time claims correlates historically with an improving labor market. Initials claims have been under 350,000 for four of the last five weeks and five of the last seven.

While continuing claims have followed a similar downward trend, those numbers are distorted by the budget sequester, which reduced funding for emergency and extended unemployment insurance programs. States have responded by either shortening the unemployment insurance program or reducing payments.

Continuing claims have averaged 3,068,600 each week since the beginning of the year compared with 3,277,654 for the first half of the year and 3,360,539 for the first six months of 2012.

Both the continuing and initial claims data sets were helped by seasonal adjustment factors higher than the previous week. Higher seasonal adjustment factors—which adjust raw data for known and predictable influences on claims such as holidays—increase the numbers for both data series.

The Labor Department reported the total number of people claiming benefits in all programs for the week ending June 15 was 4,557,765, an increase of 1,059 from the previous week. There were 5,857,081 persons claiming benefits in all programs in the comparable week in 2012. Extended benefits were not available in any state during the week ending June 15.

According to the BLS, 11,760,000 persons were officially considered unemployed in May, with 4,357,000 “long-term” unemployed—that is, out of work for at least 27 weeks. Of those individuals counted as unemployed, 7.20 million were not receiving any form of government unemployment insurance for the week ending June 15, essentially unchanged from the week earlier.

The Labor Department also reported 1,667,864 persons claiming EUC (Emergency Unemployment Compensation) benefits for the week ending June 15, a decrease of 39,245 from the prior week. There were 2,616,147 persons claiming EUC in the comparable week in 2012. EUC benefits this year were directly threatened by the federal budget sequester.

According to the Labor Department detail, also reported on a one-week lag, the largest increases in initial claims for the week ending June 22 were in California (+6,181), New Jersey (+4,952), Oregon (+2,076), New York (+1,882), and Massachusetts (+732), while the largest decreases were in Pennsylvania (-4,238), Florida (-2,050), North Carolina (-2,009), Ohio (-1,679), and Kentucky (-1,466).

Four of the six states reporting claims dropped by at least 1,000 from the prior week—Pennsylvania, Florida, North Carolina and Ohio—cited fewer layoffs in the construction sector. The other two states—Kentucky and Illinois—offered no explanation for the drop in claims. The four states reporting an increase in claims of at least 1,000—California, New Jersey, Oregon and New York—all saw a jump in layoffs in the service sector, with New Jersey and New York reporting more layoffs in the health care sector.

Hear Mark Lieberman Friday on P.O.T.U.S. Radio, Sirius-XM 124, July 8 at 12:20 p.m. Eastern.

 

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