First-time Unemployment Insurance Claims Surge; Largest Weekly Jump in 19 Months

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • There were 230,000 1st time claims for unemployment insurance for the week ended April 20, a JUMP of 37,000 from the prior week’s upwardly revised 193,000 (originally 192,000);
  • The four-week moving average of first-time claims ROSE 4,500 to 206,000;
  • Four week moving average represented 0.131percent of employment, UP from 0.128 percent the previous week;
  • The number of continued claims – individuals who had been collecting unemployment insurance — reported on a one-week lag, was 1,655,000 for the week ended April 13, UP 1,000 from the previous week’s upwardly REVISED 1,654,000 (from 1,653,000)
  • The four-week moving average of continued claims DROPPED 25,000 to 1,687,750.

Trends:

  • The week-week increase in first time claims was the largest since September 2, 2017 when claims rose 61,000 driven by Hurricane Irma which struck Florida and the Caribbean August 30 that year;
  • The increase in initial claims broke a string of five consecutive weekly declines;
  • The four-week moving average of continuing claims fell for the fifth straight week – for the first time since last August to October — to the lowest level of the year

Data Source: Department of Labor

Image result for unemployment insurance

What goes down must…

When initial claims rose to 224,000 six weeks ago, market watchers hardly blinked because claims data jump around so much. While there’s value in so frequent an indicator, there’s some peril in paying too much attention because they are so volatile.

The increase in the seasonally adjusted headline number tracked – in direction – a jump in the raw data with New England and the Northeast accounting for most of the increase though there was a sizable jump in unemployment insurance claims in California as well.

It is not unusual to see a bump in unemployment claims around holidays. Though claim can be submitted electronically, government offices which process the claims may be short-staffed due to vacations.

Meanwhile, the numbers could swell even more as 3M announced plans to lay off as many as 2,000 workers due to slower sales of its tape products, primarily in China.

Based on the weekly report though, we should see another strong Employment Situation report when it is released on May 3. From mid-March to mid-April – the reference points for the monthly report – initial claims fell 23,000 and the four-week moving average of first-time claims dropped 19,000 both pointing to a possible improvement in the unemployment rate. The number of continued claims and four-week moving average of continued claims fell 100,000 and 63,250 during the same span suggesting those previously unemployed may have gotten new jobs.

You can hear Mark Lieberman tomorrow and 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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