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First-Time Jobless Claims Drop Again

First-time claims for unemployment insurance fell 9,000 to 363,000 for the week ended October 27, the ""Labor Department"":http://www.ows.doleta.gov/press/2012/110112.asp reported Thursday. Economists expected 369,000 initial claims. It was the second straight weekly decline and the fourth drop in the last six weeks.

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The previous week's report was revised upward to 372,000 from the originally reported 369,000. It was the 39th time this year--out of 42 first-time claims reports--the initial data have been revised upward.

Continuing claims--reported on a one-week lag--increased 4,000 to 3,263,000. The previous week's initial report of 3,242,000 continuing claims was revised up to 3,259,000. The continuing claims report tracks the number of longer-term unemployed who qualify for regular state jobless benefits.

On a longer-range trend basis, the four-week moving average of initial claims dropped 1,500 to 367,250, and the four-week moving average of continuing claims fell 6,250 to 3,266,500.

The initial claims report has been unusually volatile for the last month, with wide swings in the seasonal adjustment factors used by the Labor Department to ""normalize"" the data. However, the factor used for this week's report was virtually the same as the factor used in each of the last two weeks. The seasonal adjustment for next week's report will be ""unfavorable,"" bumping first-time claims higher.

The continuing claims report will have no impact on the Employment Situation report to be released Friday by the Bureau of Labor Statistics. That report is based on the employment status and jobs data for the week of the month containing the 12th calendar day: in this case, the week of October 7th.

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Comparing that week with the equivalent week in September (the week of September 9th), initial claims were up 7,000 in October, which could push unemployment higher. However, continuing claims were down 4,000, which would bring unemployment down to some extent.

The November 2 release will be the last reading of the unemployment rate ahead of the November 6 election.

The total number of people claiming benefits in all programs for the week ending October 13 was 5,035,367, an increase of 112,147 from the previous week. There were 6,783,614 persons claiming benefits in all programs in the comparable week in 2011. Extended benefits were only available in New York during the week ending October 13. According to the BLS, unemployment was 12,088,000 in September, which means that of those individuals counted as unemployed, 7.05 million were not receiving any form of government unemployment insurance, down from 7.09 million one week earlier.

States have been borrowing from the federal government to cover shortfalls in those funds which will eventually have to be repaid--unless Congress intervenes--with higher assessments on employers. Since those assessments are a percentage of payrolls, they discourage employers from adding new workers. As of October 30, 20 states have an aggregate $27.1 billion in outstanding loans to cover shortfalls, up from $27.0 billion one week earlier. Absent Congressional action, interest on those loans could lead to states increasing contribution rates required from employers.

States reported 2,098,646 persons claiming EUC (Emergency Unemployment Compensation) benefits for the week ending October 13, an increase of 45,689 from the prior week, the Labor Department said. There were 2,945,642 persons claiming EUC in the comparable week in 2011.

According to the Labor Department detail, also reported on a one-week lag the largest increases in initial claims for the week ending October 20 were in North Carolina (+2,400), Pennsylvania (+1,679), New Jersey (+1,575), Georgia (+1,477), and Tennessee (+888), while the largest decreases were in California (-16,586), Florida (-2,414), Texas (-1,572), Michigan (-1,308), and Ohio (-1,214).

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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