1st Time Unemployment Insurance Claims Fall to 49-year low

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 207,000 1st time claims for unemployment insurance for the week ended July 14 a DECREASE of 8.000 from the prior week’s upwardly revised (214,000 to 215,000) report;
  • The four-week moving average of first-time claims DROPPED 2,750 to 220,500;
  • Four-week moving average represented 0.142 percent of employment, DOWN from 0.143 the previous week;
  • The number of continued claims – individuals who have been collecting unemployment insurance — reported on a one-week lag, was 1,751,000 for the week ended July 7, UP 8,000 from the previous week’s UPWARDLY REVISED 1,743,000 (revised from 1,739,000);
  • The four-week moving average of continued claims ROSE 6,250 to 1,735,750.

Trends:

  • Year-to-date, initial claims have averaged 237,825, down 2.6 percent from the 241,207 year-to-date average in 2017;
  • The 207,000 initial claims filings are the lowest since December 6, 1969, when there were 202,000 first -time filings;
  • The four-week moving average of continued claims increased in consecutive weeks for the first time since April;

Data Source: Department of Labor 

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Time to party like its 1969?

It should be as initial claims for unemployment insurance fell to the lowest level since December 1969 and threaten to go even lower based on data in the Job Openings and Labor Turnover Survey which show the number of job openings exceeding the number of unemployed.

 

Of course, the companion data – as reported in the Employment Situation report issued the first Friday of each month by the Bureau of Labor Statistics – don’t appear to reflect just how tight the labor market is with hourly and weekly earnings not ratcheting up as the law of supply and demand would suggest.

The Federal Reserve’s Beige Book, issued Wednesday for the six weeks ended July 9, reflected the paradoxical data.

“Employment continued to rise at a modest to moderate pace in most Districts,” according to the Beige Book. “Labor markets were described as tight, with most Districts reporting firms had difficulty finding qualified labor. Shortages were cited across a wide range of occupations, including highly skilled engineers, specialized construction and manufacturing workers, IT professionals, and truck drivers; some Districts indicated labor shortages were constraining growth. Districts noted firms were adding work hours, strengthening retention efforts, partnering with local schools, and converting temporary workers to permanent, as well as raising compensation to attract and retain employees. On balance, wage increases were modest to moderate, with some differences across sectors; a couple of Districts cited a pickup in the pace of wage growth.”

Indeed, according to the BLS report on “Real Earnings” (adjusted for inflation), hourly earnings are up just 0.1 percent June and for the 12-months ended last June are unchanged.

“From June 2017 to June 2018, real average hourly earnings decreased 0.2 percent, seasonally adjusted. Combining the change in real average hourly earnings with a 0.3-percent increase in the average workweek resulted in no change to real average weekly earnings over this period,” the BLS reported.

The unemployment insurance claims data suggest unemployment could show a decline drop in July when the BLS issues its next employment situation release. From mid-June to mid-July (the “reference” weeks used by BLS) first-time claims for unemployment insurance dropped 11,000 and the four-week moving average of initial filings fell 500 suggesting fewer layoffs. Offsetting that however, the tighter labor market could result in individuals who had dropped out of the labor force rejoining. Once those individuals resume looking for work, they would meet one of the three tests to be counted as “unemployed.” (The other two tests are out-of-work and available for work.)

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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