First-Time Jobless Claims Higher Than Expected

First-Time Jobless Claims Higher Than Expected

BY: MARK LIEBERMAN, FIVE STAR INSTITUTE ECONOMIST

First-time claims for unemployment insurance for the week ending August 24 dipped 6,000 to 331,000, the Labor Department reported Thursday. Economists expected the number of claims to fall to 330,000 from the 336,000 originally reported for the week ended August 17. The number of filings for that week was bumped up to 337,000.

The four-week moving average of first-time filings, which had been hovering near cyclical lows, rose to 331,250, the first increase since July 6.

Continuing claims for jobless benefits—reported on a one-week lag—fell 14,000 to 2,989,000 for the week ending August 17. The number of continuing claims for the week ending August 10 was revised up to 3,003,000 from the originally reported 2,999,000.

A decrease in continuing claim suggests employers have a collective need for more workers, while an increase in first-time claims suggests companies may be over-staffed.

The revised weekly report of unemployment claims for the week ending August 17 covered the same week used by the Bureau of Labor Statistics (BLS) for its monthly Employment Situation report. That report is scheduled for release September 7. It will be based on data for the week that includes the 12th day of the month.

With the data revision, initial claims rose 1,000 from mid-July to mid-August, though the four-week moving average dropped 16,000. Continuing claims for the mid-month “reference week” in August were up 27,000 from mid-July; the four-week moving average was down 29,500.

The employment data in the next week will be closely scrutinized against the Federal Open Market Committee target of a 6.5 percent unemployment rate set to trigger a tapering of the Federal Reserves stimulative monetary policy. The Fed has also said it wanted to see inflation stabilizing at about 2 percent before it would consider either increasing interest rates or cutting back on its purchases of agency mortgage backed securities or Treasury bonds.

While a large part of the week-over-week increase in first-time claims is due to more layoffs, the report also reflects the seasonal adjustment factors applied by the Department of Labor for predictable and annually recurring events that affect claims. The adjustment factor for the week ending August 24 was 83.9 compared with 83.1 for the previous week. A higher adjustment factor tends to inflate the seasonally adjusted claims data that are used for weekly comparisons.

The seasonal adjustment factors are published in advance by the Labor Department and will bottom at 78.1 for the week ending September 7.

The week-over-week drop in the average for continuing claims—9,500—was the largest since early July when continuing claims fell 39,250. The average for continuing claims is down 9.6 percent from a year ago; the average of initial claims is down almost 11 percent.

The Labor Department said the total number of people claiming benefits in all programs for the week ending August 10 was 4,467,574, an increase of 28,918 from the previous week. There were 5,530,828 persons claiming benefits in all programs in the comparable week in 2012. Extended Benefits were not available in any state during the week ending August 10. Extended benefits have been affected by the federal government sequestration. States responded to the reduced federal funds by either cutting the number of weeks of eligibility or lowering weekly payments.

According to the BLS, 11,514,000 persons were officially considered unemployed in July, with 4,246,000 “long-term” unemployed—that is, out of work for at least 27 weeks. Of those individuals counted as unemployed, 7.05 million were not receiving any form of government unemployment insurance for the week ending August 10, down from 7.08 million one week earlier.

The Labor Department reported 1,511,619 persons claiming Emergency Unemployment Compensation (EUC) benefits for the week ending August 10, an increase of 10,551 from the prior week. There were 2,273,317 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 August 17 were in California (+5,867), Missouri (+1,757), New Jersey (+677), Kansas (+460), and New York (+445), while the largest decreases were in North Carolina (-1,017), Pennsylvania (-899), Maryland (-722), Washington (-720), and Florida (-601).

California reported the increase in first-time claims for the week ending August 17 was attributable to fewer layoffs in the service sector, while Missouri reported an increase in manufacturing layoffs.

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