1st-time Unemployment Insurance Claims Jump After Largest Drop in Two Months

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 216,000 1st-time claims for unemployment insurance for the week ended July 13, an INCREASE of8,000from the previous week’s upwardly revised 208,000 (from 209,000);
  • The four-week moving average of initial claims DROPPED 250 to 218,750;
  • Four-week moving average represented 0.139 percent of employment, UNCHANGED from the previous week;
  • The number of continued claims – individuals who had been collecting unemployment insurance — reported on a one-week lag, was 1,686,000 for the week ended July 6, DOWN 42,000 from the previous week’s UPWARDLY REVISED 1,728,000; (from 1,723,000)
  • The four-week moving average of continued claims ROSE 5,000 to 1,701,000.

Trends:

  • The four-week moving average of initial claims as a percentage of total employment fell for the eighth straight week
  • The week-week drop in continued claims was the largest in 13 weeks (week ended April 6, down 62,000)
  • Four-week moving average of continued claims ROSE for the fourth straight week

Data Source: Department of Labor

Image result for unemployment

Offering a look forward to the July Employment Situation release on August 2, the weekly report on unemployment insurance claims suggests the unemployment rate could remain at its current 3.7 percent when the data for July are published.

The unemployment rate (taken out one additional digit) rose from 3.62 percent to 3.67 percent in June.

From mid-June to mid-July, the reference weeks used by the Bureau of Labor Statistics for the unemployment rate, first-time unemployment claims barely budged, down just 1,000 and the four-week moving average of initial claims was even more stable, down just 250. Reference week comparisons for continued claims won’t be available until next week since continuing claims information is published on a one-week lag.

The Federal Reserve’s Beige Book, released Wednesday, said employment grew at a modest pace, from May 24 through July 8, the period covered by the anecdotal report, “slightly slower than the previous reporting period.”  Labor markets, the Beige Book said, “remained tight, with contacts across the country experiencing difficulties filling open positions.” The report, the Beige Book added, “noted continued worker shortages across most sectors, especially in construction, information technology, and health care.” That said, the Beige Book also indicated “some manufacturing and information technology firms in the Northeast reduced their number of workers

The “news” from the unemployment claims report was the sharp drop in continued claims for unemployment, only the third week-week decline in the last two months and the largest week-week drop since early April. Continued claims are seen as a surrogate for hiring since there are only three ways for continued claims to decline: if benefits expire (unlikely in a time of high employment), if the claimant becomes ineligible for unemployment insurance due to injury or death, or if the individual; gets a job. The decline in continued claims reflects the return to work of furloughed UAW members who collect benefits while they are laid off as auto plants retool for a new model year.

You can hear Mark Lieberman every Friday at 6:20 am (EDT) am on the Morning Briefing on P.O.T.U.S. radio, Sirius-XM 124. You can follow him on Twitter at @foxeconomics.

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