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

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 209,000 1st-time claims for unemployment insurance for the week ended July 6, a DECREASE of13,000from the previous week’s upwardly revised 222,000 (from 221,000);
  • The four-week moving average of initial claims DROPPED 3,250 to 219,250;
  • Four -week moving average represented 0.140 percent of employment, DOWN from 0.142 percent the previous week;
  • The number of continued claims – individuals who had been collecting unemployment insurance — reported on a one-week lag, was 1,723,000 for the week ended June 29, UP 27,000 from the previous week’s UPWARDLY REVISED 1,696,000; (from 1,686,000)
  • The four-week moving average of continued claims ROSE 5,750 to 1,694,750.

Trends:

  • The week-week drop in initial claims for unemployment insurance was the largest since initial claims fell 16,000 for the week ended May 11;
  • Four-week moving average of 1st-time claims fell for the first time in five weeks;
  • The week-week increase in continued claims – a surrogate for hiring – was the third in a row and fifth in the last six weeks.

Data Source: Department of Labor

Image result for unemployment insurance claims

The report on initial claims for unemployment always gets a bit wonky in and around holiday weeks as workers who process claims (even though they can be filed electronically) take time off surrounding holidays. The analysis of this week’s report was further complicated by annual retooling furloughs at auto plants. Furloughed United Auto Workers (UAW) employees qualify for unemployment insurance for their time off, inflating claims.

That said, the only concern from this week’s Labor Department data might come from the slow but steady increase in continued unemployment insurance claims reflecting those who have been collecting benefits for at least two weeks. A decrease in continued claims suggests an increase in hiring, one of the handful of ways of getting off unemployment rolls while an increase suggests just the opposite.

That data point should turn downward as furloughed workers return to their assembly line posts.

One statistic that remains consistently positive is the tracking claims as a percentage of those employed (a necessary prerequisite for claiming unemployment insurance). That ratio has remained in a minuscule range of 0.129 percent to 0.146 percent this year down dramatically for the depth of the Great Recession 10 years ago when it hovered around 0.48 percent.

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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