1st-time and Continued Unemployment Insurance Claims Jump

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 220,000 1st-time claims for unemployment insurance for the week ended Aug 10, 2019, an INCREASE of9,000from the previous week’s upwardly revised 211,000 (from 209,000);
  • The four-week moving average of initial claims ROSE 1,000 to 213,750;
  • Four -week moving average represented 0.136 percent of employment, up from 0.135 percent the previous week;
  • The number of continued claims – individuals who had been collecting unemployment insurance — reported on a one-week lag, was 1,726,000 for the week ended August 3, UP 39,000 from the previous week’s upwardly REVISED 1,687,000 (from 1,684,000)
  • The four-week moving average of continued claims ROSE 9,250 to 1,697,250;

Trends:

  • First-time claims rose to the highest level since the end of June;
  • The week-week increase in continued claims was the largest in almost six months (up 54,000 for the week ended February 16);
  • For the first time since January 2010, continued claims matched the year-earlier levels; continued claims had been below the year-earlier total for 948 weeks!
  • The four-week moving average of initial claims as a percentage of total employment rose for the first time in three months.

Data Source: Department of Labor  

Image result for unemployment insurance claims

Though one week doesn’t constitute a trend, the combination of revived recession rumors and disappointing news about unemployment claims represents piling on among those who might have anxiety about the economy.

The increase in initial claims could lead to an eventual additional increase in continued claims which in turn points to a hiring slowdown as individuals collecting unemployment insurance are unable to find jobs.

The arithmetic domino effect would show up in data next month in the Employment Situation report for August (to be published September 6). That report includes not only the basic labor force data as well as details about the duration of unemployment and the reason for unemployment. The latter category includes re-entrants to the labor force, essentially individuals who have resumed looking for work, one of the criteria for classification as “unemployed.”

Perhaps the most concerning of the new data points – if it continues – is the jump in continued claims for unemployment insurance because of its relationship to hiring and new job creation.

To the extent recession concerns may be real – and not just a reaction to the inverted yield curve showing short term interest rates higher than long term rates – we could see some cutback in job creation as early as next month. We’ve already seen some tariff impact on hiring with six straight months of retail job cuts. With plans to defer new, higher tariffs until December, any employment-related impact could be deferred.

You can hear Mark Lieberman every Friday at 6:20 am on POTUS, Sirius-XM 124. You can follow him on Twitter at @foxeconomics.

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