1st Time Unemployment Claims Down Again

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 210,000 1st time claims for unemployment insurance for the week ended Aug 18 a DECREASE of 2.000 from the prior week’s unrevised report;
  • The four-week moving average of first-time claims FELL 1,750 to 213,750;
  • Four-week moving average represented 0.137 percent of employment, DOWN from 0.138 percent the previous week;
  • The number of continued claims – individuals who have been collecting unemployment insurance — reported on a one-week lag, was 1,727,000 for the week ended August 11, DOWN 2,000 from the previous week’s UPWARDLY REVISED 1,729,000 (revised from 1,721,000);
  • The four-week moving average of continued claims FELL 5,000 to 1,735,500.

Trends:

  • Four-week moving average of initial claims HAS FALLEN 11.5 percent since the beginning of the year;
  • The four-week moving average of initial claims has declined year-year for 45 straight weeks;
  • The number of continued claims is DOWN 12.1 percent since the beginning of the year;
  • The four-week moving average of continued claims has fallen 9.8 percent since the beginning of the year.

Data Source: Department of Labor 

Image result for employment

With the ongoing drop in both initial and continued claims for unemployment insurance, it may no longer be instructive to watch the weekly numbers themselves so closely. Rather these data points are perhaps better observed by taking a step back. Much like a painting by Claude Monet, the true picture is not as evident when viewed too closely.

And that distant view is of yet a better picture than the closeup with longer trends of decline which could mean, as the Federal Open Market Committee observed in the recently released minutes of its August 1 meeting, even further declines in the nation’s unemployment rate.

Of course, the Board is on guard against too precipitous a decline which is why, must to President Trump’s consternation, the FOMC is likely to raise interest rates more often than it previously suggested.

Initial claims for unemployment insurance turn into unemployment rate data as individuals remain unemployed.  Even in a seemingly robust labor market environment, individuals who become unemployed are not quickly snapped up for other jobs.

(Individuals who are counted as unemployed are not automatically covered by unemployment insurance for a variety of reasons. Those who are discharged for cause, for example, could have their claims for benefits rejected. Continued claims historically have been about 28 percent of unemployment.)

We’re left with looking at trends, rather than specific data points. With that analysis in mind claims for unemployment insurance, particularly continuing claims, assume a greater significance in trend watching.

You can hear Mark Lieberman every Friday at 6:20 am on the Morning Briefing on P.O.T.U.S. radio @sxmpotus, Sirius-XM 124.

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