Filings for Unemployment Insurance Down Sharply as Holiday Impact Fades

By Mark Lieberman

Managing Director and Senior Economist

Highlight

  • There were 233,000 1st time claims for unemployment insurance for the week ended July 15, 15,000 FEWER than the prior week;
  • The number of filings for the week ended July 8 was revised up from 247,000 to 248,000;
  • The smoothing four-week moving average of first time claims was 243,750, DOWN 2,250 from the previous week’s average of 246,000; The moving average represents about .0159 percent of total employment;
  • There were 1,977,000 continued claims for unemployment insurance 28,000 MORE than the previous week’s downwardly revised 1,949,000 continued claims;
  • Four-week moving average of continued claims INCREASED 8,750 to 1,959,000.

Image result for unemployment insurance claims

With the Fourth of July fading into the rearview mirror, the labor market resumed its sideways movement with initial claims for unemployment insurance dropping but continued claims for benefits increasing, the Labor Department reported Thursday.

Indeed, one of the complicating challenges to interpreting this data report is the impact of the auto sector ad auto workers are traditionally laid off at the end of June and in early April as car manufacturers retool plants for the new model year. That practice still has an impact on unemployment data but not as much as in past years as auto manufacturers seem to use their own calendars to introduce new models.

That said, the United Auto Workers contract still allows furloughed auto workers to collect unemployment insurance during the retooling when they are not working.

During the retooling season this year, first time claims for unemployment insurance rose 12,000 over a three-week span but have since dropped 17,000 in the last two weeks, replacing chaos with some degree of order.

Continued claims – which serve as a surrogate for hiring – meanwhile are telling a different story. The last time continued claims declined, was the week ended May 20. Since then the data series has increased 58,000 or 3.0 percent. That increase suggests limited hiring out of the pool of workers on unemployment rolls; even though the number of new claims has been relatively low they still add to the total.

The pattern of continued claims – either the weekly number or the four-week moving average – setting nee record lows is long past. In mid-May, the four-week moving average of continued claims was 1,915,500 –the lowest level since April 1973. With this week’s report (continued claims are reported on a one-week lag) the four-week moving average of continued claims is at 1,959,000 – a 2.3 percent increase. Considering that week-week gyrations are usually measured in tenths of percentage points, the 2.3 percent change becomes significant.

The weekly claims reports are shaking off the impact of the July 4 holiday when claims can be filed electronically but require human intervention for processing (and verification) at a time when vacation schedules leave many government offices short-staffed.

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. You can follow him on Twitter at @foxeconomics.

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