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First-Time Jobless Claims in Surprise Jump

First-time claims for unemployment insurance jumped a surprising 18,000 to 354,000 for the week ending June 15, the ""Labor Department"":http://ows.doleta.gov/press/2013/062013.asp reported Thursday.

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Economists expected a more modest increase to 340,000 from the prior week. Claims filings for the week ending June 8 were revised up to 336,000 from the originally reported 334,000.

The claims report covered the same period used by the Bureau of Labor Statistics (BLS) for its monthly employment situation report (to be released July 5).

From mid-May to mid-June, the number of initial claims increased 10,000, while the four-week average of first-time claims went up 7,750, suggesting layoffs could be a drag on payrolls and the unemployment rate in the employment situation report. Federal Reserve Chairman Ben Bernanke reiterated Wednesday the ""Federal Open Market Committee's"":http://www.themreport.com/articles/upbeat-fomc-votes-no-change-in-stimulus-2013-06-19 (FOMC) 6.5 percent unemployment rate target as a condition for raising interest rates. The claims report suggests no near-term action on rates by the committee.

The number of persons continuing to collect unemployment insurance for the week ended June 8, reported on a one-week lag, dropped 40,000 to 2,951,000. The prior week's original report of 2,973,000 original claims was revised up to 2,991,000.

The increase in initial claims filings was the first in three weeks. Economists generally consider 350,000 first-time claims filings to be normal ""churn"" and the ""tipping point"" between an expanding and contracting labor market. Claims have been trending down to 350,000 for several months.

Indeed, the four-week moving average of first-time claims rose 2,500 to 348,250 for the four weeks ending June 15. The four-week moving average of continuing claims, though, increased 7,000 to 2,978,750 for the period ending June 8, marking the first increase in the average since the beginning of April.

Continuing claims have been affected by the budget sequester, which took effect at the beginning of March, causing states to either reduce weekly payouts or cap the number of weeks an individual could collect unemployment insurance.

The initial claims data shrugged off two factors that could have led to an increase in claims: a backlog in processing claims filed for the holiday-shortened week ending June 1 and less favorable seasonable adjustment factors that are developed to account for known impacts on data.

The Labor Department said the total number of people claiming benefits in all programs for the week ending June 1 was 4,533,560, an increase of 18,115 from the previous week. There were 5,818,334 persons claiming benefits in all programs in the comparable week in 2012. Extended benefits were not available in any state during the week ending June 1.

According to the BLS, 11,760,000 persons were officially considered unemployed in May, with 4,357,000 ""long-term"" unemployed--that is, out of work for at least 27 weeks. Of those individuals counted as unemployed,7.23 million were not receiving any form of government unemployment insurance for the week ending June 1, down from 7.24 million one week earlier.

The Labor Department also said states reported 1,683,962 persons claiming EUC (Emergency Unemployment Compensation) benefits for the week ending June 1, a decrease of 19,496 from the prior week. There were 2,533,716 persons claiming EUC in the comparable week in 2012. EUC benefits this year were directly threatened by the federal budget sequester.

According to the Labor Department detail, also reported on a one-week lag, largest increases in initial claims for the week ending June 8 were in Pennsylvania (+5,214), Illinois (+3,364), Texas (+3,007), Georgia (+2,937), and Ohio (+2,326), while the largest decreases were in California (-1,209), Kansas (-404), Nebraska (-314), Missouri (-212), and Montana (-202).

Pennsylvania, the Labor Department said, cited layoffs in the transportation, healthcare and social services, entertainment, lodging and food service, and scientific and technology services industries. Illinois attributed the increase in claims to layoffs in transportation and warehousing, construction, and accommodation and food service. Georgia reported layoffs in manufacturing, trade, administrative and support service, transportation and warehousing, and healthcare and social assistance industries.

_Hear Mark Lieberman Friday on P.O.T.U.S. Radio, Sirius-XM 124, Friday at 6:20 a.m. Eastern._

About Author: Mark Lieberman

Mark Lieberman is the former Senior Economist at Fox Business Network. He is now Managing Director and Senior Economist at Economics Analytics Research. He can be heard each Friday on The Morning Briefing on POTUS on Sirius-XM Radio 124.
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