This week’s Unemployment Insurance Weekly Claims Report has been released. Initial claims dropped to 432,000. Last week’s number was revised up 2,000. This was significantly better than the Bloomberg consensus range of 445k to 465k 450k. From the report:
In the week ending Dec. 26, the advance figure for seasonally adjusted initial claims was 432,000, a decrease of 22,000 from the previous week’s revised figure of 454,000. The 4-week moving average was 460,250, a decrease of 5,500 from the previous week’s revised average of 465,750.
The advance seasonally adjusted insured unemployment rate was 3.8 percent for the week ending Dec. 19, unchanged from the prior week’s revised rate of 3.8 percent.
The advance number for seasonally adjusted insured unemployment during the week ending Dec. 19 was 4,981,000, a decrease of 57,000 from the preceding week’s revised level of 5,038,000. The 4-week moving average was 5,101,000, a decrease of 122,250 from the preceding week’s revised average of 5,223,250.
These numbers obviously presented a pleasant surprise for many people. Unfortunately, there’s a bit “wait and see” attitude prevailing right now. We’ll have to wait to see how the beginning of the new year shapes up to see if we’ll actually get any jobs growth. I’m still operating under the assumption that bringing the adjusted number of new claims under 400k will provide a stable enough environment to see jobs growth in the monthly reports. This doesn’t sway me from my pessimistic views, but the statistics don’t really care about my level of optimism.
The unadjusted numbers are also quite good. This will probably be the last week of great unadjusted numbers for a while, with the next two reports appearing quite bad. There should still be considerable improvement year over year, but this is offset by the fact that there are fewer jobs to be lost from last year. The unadjusted numbers for the last holiday shopping week:
The advance number of actual initial claims under state programs, unadjusted, totaled 557,155 in the week ending Dec. 26, a decrease of 8,088 from the previous week. There were 717,000 initial claims in the comparable week in 2008.
The advance unadjusted insured unemployment rate was 3.9 percent during the week ending Dec. 19, a decrease of 0.2 percentage point from the prior week. The advance unadjusted number for persons claiming UI benefits in state programs totaled 5,090,652, a decrease of 254,815 from the preceding week. A year earlier, the rate was 3.4 percent and the volume was 4,572,637.
Many reports indicate that businesses were more cautious about hiring this holiday season than last. The retailers, in particular, were less likely to over-hire. We’ll have a better idea with the employment situation report for December, released next Friday. I did my holiday shopping later this year than last, but spent less time waiting in line. If I extrapolate this out to everyone, the numbers are not great (everyone is then male and spent too much on camping supplies, so there are disadvantages to extrapolating a single data point).
The good / bad lists Don’t actually tell much of a story this week.
The good list (-1000 or more): TN, IL, PA, GA, NC, SC, CO, WV, LA, AL
The bad list (+1000 or more): NY, NV, KY, WA, NJ, OK, WI, MO, IA, FL, CA, MI
MI (the worst) was +8,382 vs TN (the best) at -2,972. Michigan represents auto industry woes. Construction was well represented, but regional, with Illinois, Georgia, and Alabama giving credit in the bad list and New York, Wisconsin, Montana, Iowa, Florida, and California giving blame in the bad list. The appearance in the good list doesn’t mean that construction jobs are appearing, only that there were fewer construction layoffs than the previous week. We’ll need to wait for the monthly report to see where actual employment strength lies.
Trying to excuse itself, California makes a note that their claims offices were open for 6 days of the week, allowing them to process more claims.
With Armageddon averted (we won’t simultaneously expire the benefits of 3 million unemployed), the short-term outlook on unemployment is entirely dominated by how January shapes up. If this trend for new unemployment insurance claims continues after whatever hiccups January brings, the long-term outlook is better. Unfortunately, we need to add about 100,000 jobs a month just to keep up with demographics. Add the millions of unemployed to that, and it’s apparent that an engine for jobs growth will not only be obvious in retrospect, it will need to be painfully obvious when it appears in order to make a dent in the employment problem. Otherwise, we are looking at a rather long period of high unemployment. That’s something that unemployment insurance simply isn’t designed to help. Something to think about for the new year.
