This was a bit of critical news that worked out as needed. The Unemployment Insurance Weekly Claims Report has been released. Last week I stated that we would need one more bad data point before admitting that another trend up in new claims was happening. This was largely because of the weather’s unknown impact on the underlying trend. This week rejects the establishment of an uptrend. Initial claims dropped to 469,000. Unfortunately, last week’s figure was revised up 2,000. This week’s drop placed new claims toward the low end of the Bloomberg consensus range of 460k to 490k. From the report:

In the week ending Feb. 27, the advance figure for seasonally adjusted initial claims was 469,000, a decrease of 29,000 from the previous week’s revised figure of 498,000. The 4-week moving average was 470,750, a decrease of 3,500 from the previous week’s revised average of 474,250.

The advance seasonally adjusted insured unemployment rate was 3.5 percent for the week ending Feb. 20, a decrease of 0.1 percentage point from the prior week’s revised rate of 3.6 percent.

The advance number for seasonally adjusted insured unemployment during the week ending Feb. 20 was 4,500,000, a decrease of 134,000 from the preceding week’s revised level of 4,634,000. The 4-week moving average was 4,575,750, a decrease of 29,250 from the preceding week’s revised average of 4,605,000.

The flip side of this news is that the nice trend down we were enjoying also hasn’t been re-established. We’re in limbo as far as the trend goes. That ever-elusive 400k mark for seasonally adjusted claims may have some more time before being crossed. Removing the seasonal adjustment doesn’t improve anything this week. New claims of actual unemployed people increased:

The advance number of actual initial claims under state programs, unadjusted, totaled 471,720 in the week ending Feb. 27, an increase of 17,128 from the previous week. There were 645,827 initial claims in the comparable week in 2009.

The advance unadjusted insured unemployment rate was 4.3 percent during the week ending Feb. 20, unchanged from the prior week. The advance unadjusted number for persons claiming UI benefits in state programs totaled 5,571,085, an increase of 24,534 from the preceding week. A year earlier, the rate was 4.7 percent and the volume was 6,231,080.

It’s appropriate to throw out a reminder that new claims are the important data in this report. High new claims indicates high churn in the jobs market. While it is conceivable that new jobs could be added in such an environment, historically that appears not to be the case. Convincing moves below 400k are associated with a recovery in employment. Continuing claims are historically a good indicator of employment recovery, but once the duration of a downturn crosses some threshold, its utility as an indicator falls. That threshold is difficult to pin down, but is where EUC (emergency unemployment compensation, as distinguished from UI) becomes a significant factor. It is safe to say that we are well past that point.

The good / bad lists tell an unusual story this week (about the week ending 2/20).

The good list (-1000 or more): CA, NC, FL, MI, OH, AR, OR, PR, WA, TN, SC, TX

The bad list (+1000 or more): IL, DE, MD, MO, CT, MA, NJ

NJ (the worst) was +4,879 vs CA (the best) at -12,000. It’s good to see California stay in the top spot (though some of the reduction was credited to a shorter work week). But what was unusual was not the lists, but the comments. Two states (DE, MD) blamed the weather for a backlog that increased their claims. Two other states (CT, MA) blamed school closings for the increase in claims. Ouch. New Jersey had both the weather and a statewide furlough day the prior week compound their backlog.

I mentioned last night that an extension to unemployment benefits was passed by the Senate and signed by Obama on March 2. This extends both EUC and COBRA subsidies for one month. What this doesn’t do is extend the duration of coverage of EUC by an additional month. People exhausting their benefits are waiting on a different bill.

This report is consistent with additional job losses in February. Tomorrow’s employment situation report will be released along with a statement of what adjustments were made to compensate for the weather. The census probably added 30,000 jobs in February (source). That’s significant compared to the monthly change levels we’ve been experiencing. Will it be enough?