1st Time Jobless Claims Drop As Congress Debates Extensions

By Mark Lieberman

Managing Director and Senior Economist

First time claims for unemployment insurance fell 15,000 for the week ended January 4 to 330,000, the Labor Department reported Thursday, slightly lower than the 331,000 anticipated by economists surveyed by Bloomberg. The report of claims for the week ended December 28 was revised up to 345,000 from the originally reported 339,000.

The four week moving average for first time claims dropped 9,750 to 349,000 from 358,750.

Continuing claims for unemployment insurance– reported on a one week delay – rose 50,000 to 2,865,000 for the week ended December 28. The number of continuing claims for the week ended December 21 was revised to 2,815,000, down 18,000 from the original report of 2,833,000. The four week moving average for continuing claims rose 18,750 to 2,872,250 from 2,853,500.

The report does not include the impact of the elimination of the emergency unemployment compensation (EUC) program which ended December 31. That program extended unemployment benefits beyond the 26 weeks offered by most states. According to the labor department, 1,287,037 persons were receiving benefits under the EUC program for the week ended December 21. The program was eliminated under the budget compromise enacted by Congress and signed by the President just before Congress took off on its holiday recess. Democrats have pledged to try to continue the program when Congress reconvenes. A procedural vote on extending the program for three months was approved by the Senate.

The claims report will have no impact on the Employment Situation report to be released Friday by the Bureau of Labor Statistics. That report, based on labor conditions for the week including the 12th of December, the “reference week,” is, according to economist surveyed by Bloomberg, expected to show the nation added 200,000 jobs in December but the unemployment rate was unchanged at 7.0 percent.

From the November reference week to mid-December, first time claims for jobless benefits rose 18,000 while the four week moving average of initial claims dropped 1,500. Continuing claims, often seen as a measure of success in obtaining a job, increased 65,000 from November to December but the four week moving average from month to month dropped 18,000. The averages suggest a relatively strong payroll report but the unemployment rate will be affected as much by the size of the labor force as those who meet the definitional test for unemployed: out-of-work, available-for-work and looking-for-work.

The drop in first time claims was only the second the in the last five weeks. The dip was due in part to seasonal adjustment factors accounting for individuals whose holiday-related employment ended just after Christmas. While the seasonally adjusted claims report showed a decline, the unadjusted, raw data, showed the number of first time claims increased 34,384 for the week ended January 4. The seasonal adjustment factors will peak with the report for the week ended January 11. Claims are expected to increase in the next few weeks with holiday-related layoffs but the increase will be muted by the seasonal adjustment factors. Those factors attempt to “normalize” changes in raw data due to recurring, predictable events.

The total number of people claiming benefits in all programs for the week ending December 21 was 4,193,749, a decrease of 265,067 from the previous week. There were 5,356,419 persons claiming benefits in all programs in the comparable week in 2012. No state was providing extended benefits which are triggered when the unemployment rate in a state exceeds a specific threshold for that state.

According to the BLS, 10,907,000 persons were officially considered unemployed in November with 4,066,000 “long-term” unemployed that is, out of work for at least 27 weeks. Of those individuals counted as unemployed, about 6.7 million were not receiving any form of government unemployment insurance for the week ended December 21, up from 6.5 million one week earlier.

The number of individuals receiving EUC payments for the week ending December 21 represented a decrease of 104,260 from the prior week and of 704,417 from the comparable week in 2012.

According to the Labor Department detail, also reported on a one-week lag, the largest increases in initial claims for the week ending December 28 were in Michigan (+16,056), Pennsylvania (+10,601), New Jersey (+7,345), Ohio (+7,036), and Iowa (+5,369), while the largest decreases were in California (-14,635), Texas (-6,723), Florida (-3,738), North Carolina (-2,694), and South Carolina (-2,184).

Hear Mark Lieberman Friday, on P.O.T.U.S. radio @sxmpotus, Sirius-XM 124, at 8:45 am Eastern Time. You can follow Mark Lieberman on Twitter at @foxeconomics.

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