1st Time Jobless Claims Up Less Than Expected

1st Time Jobless Claims Up Less Than Expected

BY: MARK LIEBERMAN, FIVE STAR INSTITUTE ECONOMIST

Following a sharp drop in first time claims for unemployment insurance a week earlier, initial filings rose 15,000 for the week ended September 14 to 309,000, the Labor Department reported Thursday. Economists had expected the number of claims to jump 49,000 to 341,000, from the 292,000 originally reported for the week ended September 7. The number of filings for that week was revised up to 294,000.

The four week moving average of first time filings fell to 314,750, the lowest level since October 2007.

Continuing claims for jobless benefits – reported on a one-week lag – fell 28,000 to 2,787,000 for the week ended September 7, the lowest level since January 2008. The number of continuing claims for the week ended August 31 was revised down to 2,815,000 from the originally reported 2,871,000.

The four week moving average of continuing claims dropped 54,000 to 2,885,000, the lowest since March 2008.

Initial claims data for the week ended September 7 had been affected by the Labor Day holiday and because California and one other, unidentified, state upgraded their computer systems which delayed processing claims. But there were no similar exogenous events for the week covered by today’s report. The reports have been affected as well by favorable seasonal adjustment factors built around recurring, historic events which included tropical storms. Those storms did not materialize this year but the adjustment factors anticipated and accounted for them nonetheless.

Initial claims generally reflect layoffs which continuing claims hiring. 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 week covered by today’s first time claims report is the same as the “reference week” used by the Bureau of Labor Statistics in preparing the monthly employment situation release – which includes the unemployment rate – for

September to be reported October 4. That this week’s claims data remained significantly lower than recent weeks could suggest an important shift in labor trends. However workers hired for summer jobs at retailers or restaurants and hotels could swell unemployment ranks when those jobs end with the close of the summer. Retail and restaurant and hotel jobs represented nearly half of the increase in employment in the last three months.

From mid-August to mid-September the number of first time claims dropped 28,000 and the four week moving average fell 15,750, suggesting layoffs were less of a drag on payrolls. That said, the four week moving average of initial claims fell 16,000 from mid-July to mid-August and the BLS reported payrolls grew a disappointing 169,000 in August as the unemployment rate fell to 7.3 percent largely because of dropout from the labor force which fell 312,000 or 0.2 percent – five times the average decline in the labor force in the previous 12 months.

The Labor Department said the total number of people claiming benefits in all programs for the week ending August 31 was 4,037,491, a decrease of 235,250 from the previous week. There were 5,173,597 persons claiming benefits in all programs in the comparable week in 2012. No state was providing Extended Benefits program during the week ending August 31. Extended benefits have been affected by the federal government sequestration. States have responded to the reduced federal funds by either cutting the number of weeks of eligibility or lowering weekly payments.

According to the BLS, 11,316,000 persons were officially considered unemployed in August with 4,290,000 “long-term” unemployed that is, out of work for at least 27 weeks. Of those individuals counted as unemployed, 7.27 million were not receiving any form of government unemployment insurance for the week ended August 31, up from 7.04 million one week earlier.

The Labor Department also reported 1,454,824 persons claiming Emergency Unemployment Compensation (EUC) benefits for the week ending August 31, unchanged from the prior week. There were 2,162,532 persons claiming EUC in the comparable week in 2012. EUC benefits this year were also 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 September 7 were in Tennessee (+681), Oklahoma (+601), Mississippi (+298), Maine (+219), and South Carolina (+192), while the largest decreases were in California (-25,412), New York (-2,260), Florida (-1,808), Oregon (-1,738), and Pennsylvania (-1,295).

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