Unemployment Insurance Claims – Jobs. Trends. Insight.

WANTED to provide monthly US Nonfarm Employment Forecast as an offline service

By Charles Thibault on June 3, 2010 in BLS Nonfarm Employment, S&P 500 - SPY, Unemployment Insurance Claims.

After more than a year of forecasting changes in US Nonfarm Employment using online job ad data, WANTED will no longer publish a free and publicly available forecast of monthly employment changes.

The monthly BLS Nonfarm Employment Forecast will now be made available as an offline service to new or existing WANTED Analytics™ subscribers. The monthly forecast will not be part of the standard subscription to the WANTED Analytics platform of applications – the Nonfarm Forecast is offered as a stand-alone product subject to its own service level agreement. Anyone interested in this service is invited to contact us.

WANTED will still provide guidance on US labor market dynamics on this blog through a monthly 'National Hiring Demand Outlook' article.

This decision is driven by three considerations:

National Labor Demand Grows – 37,000 More Online Job Ads in April

By Charles Thibault on May 26, 2010 in Hiring Demand Indicators, Labor Market Dynamics, S&P 500 - SPY, Unemployment Insurance Claims.

Labor Demand in the United States continued to grow in April.

In the last 4 weeks, 1.35 million new job ads were posted on paid-for online job boards. This includes 158,000 postings on CareerBuilder, 157,000 on Monster, 64,000 on HotJobs, and 71,000 job ads on Dice, an IT specialized job board.

There were 37,000 more online job ads posted in April compared to March. Considering the data collected so far for May, those monthly gains have remained stable at 33,000 new online job ads.

This growth comes after a solid first part of 2010 in terms of labor demand. The US was finally able to start generating gains in employment, even if we remove temporary hiring at the Census Bureau.

Compared to January, even the number of new Unemployment Insurance Claims fell from 490,000/week to around 450,000.

Source: WANTED Analytics

However, recent growth in Hiring Demand has decelerated a bit, although it remains positive in absolute terms. April did see an increase of 37,000 online job ads – but we had seen gains of 100,000 for March, 130,000 for February, and 143,000 for January. Even the number of new UI claims showed weakness last week, rising by 25,000 new claimants.

March 2010 BLS Nonfarm Forecast: -52,000

By Charles Thibault on March 23, 2010 in BLS Nonfarm Employment, Unemployment Insurance Claims.

WANTED Technologies expects that the Bureau of Labor Statistics will announce a drop in US Nonfarm Employment of 52,000 workers for March 2010.

Last month, the BLS said that US Nonfarm Employment dropped by 36,000 workers.

Click chart to view full size

This month's forecast is based on the following labor market dynamics:

Particularly meaningful for this month's forecast are offsetting changes in new Unemployment Insurance Claims:
- There were consecutive increases of 32,000 and 24,000 new UI Claims for the weeks ending February 13th and February 20th 2010. The week ending February 20th had a total 498,000 new UI claims. The BLS measures employment on the 12th day of each month, so technically the report ending February 13th can be excluded since it overlaps with February's employment count. However, it still provides a signal on what happened in the labor market and is a close straddle on the March employment reporting date.
- More recent UI claim reports have been positive. New Claims fell by 30,000 for the week ending February 27th, settling at 468,000. In the past two weeks UI Claims have improved marginally as well, falling to 462,000 and 457,000 for the weeks of March 6th and March 13th. This is a good signal as it indicates continued positive momentum in the labor market. The 4-week moving average has returned to levels around 470,000 and will fall precipitously when the value of 498,000 drops out the 4-week window used this week's release.
- The 4-week moving average now stands at 471,250. This is an increase of 3,500 claims relative to the 4-week moving average of 467,750 seen a month ago. Over a 4-week period, that means a cumulative total 14,000 more new Unemployment Insurance Claims.
New online job ads on major national job boards grew by 9,500 ads in March. This is a slight softening after 4 consecutive months of improvements in the range of 12,000 to 14,000 online job ads. Changes in Employment depend two variables – separations and hires – and we've discussed in a previous post how it's possible to have both growing hiring and falling employment.

Both of these factors combined – a slight increase in new UI claims, and a slight softening of labor demand – lead us to forecast a drop in US Nonfarm Employment of 52,000 workers. This is a relative worsening of 16,000 workers compared to last month's drop of 36,000 workers. There was no surge in Hiring Demand that would lead us to forecast employment gains.

Employment changes will fluctuate around zero as the economy and labor market have reached a steady-state equilibrium.

Over the past three years, the average difference between the BLS's first preliminary data release and its third and final data release has been 78,000 workers a month. The BLS's first preliminary report is treated as a forecast of its third and final report. The WANTED historical standard of error of forecast is 84,000 workers per month, which is consistent with the BLS's average error to its own data.

The BLS will release its Employment Situation Summary for March on Friday, April 2, 2010, at 8:30 a.m

UI Claims Rise by 11,000 as Employers Skip Normal January Hiring Spree; Next Week Critical

By Charles Thibault on January 15, 2010 in Unemployment Insurance Claims.

New Unemployment Insurance Claims rose by 11,000 in this week's Department of Labor Report. Employers missed their usual January rendez-vous with job seekers – Hiring Demand fell by 7% or 15,000 new online job ads** last week on a seasonally adjusted basis. Employers can make it up next week, however.

December and January employment data is highly volatile in terms of seasonal fluctuations. Job ads usually drop heavily during Christmas-time and then pop back up in January.

What's more, there's something we call "the January bounce" – not only does January Hiring Demand come back from the Holiday slump, it usually jumps above previous December levels. New budgets are usually the source of this "January Bounce" – there's a sort of pent-up demand for labor that's waiting for a new budget cycle to kick in.

During the last week of December, UI Claims benefited from a smaller than expected seasonal dip in Hiring Demand (UI claims improved by 22,000). This week, however, UI Claims suffered from a smaller than expected January rebound in Hiring Demand.

The two tables below show historical December/January seasonal fluctuations, compared to what we've seen so far this year.

Good News from UI Claims Report as Hiring Demand Jumps; Forecast of -18,000 for Next Week

By Charles Thibault on December 31, 2009 in Unemployment Insurance Claims.

The Department of Labor released some good news this morning: there were 22,000 fewer new Unemployment Insurance claims compared to the prior week, a 4.8% drop. Our forecast was for a drop of 6,000 so the news is better than we had expected. This improvement in the UI claims report comes as the number of online job ads jumped 8.6% in a single week on a seasonally adjusted basis.

This news also confirms our expectation that the Bureau of Labor Statistics will announce increases in levels of US employment for December.

The correlation between the number of new online job postings (Hiring Demand) and unemployment insurance claims has been -0.72 over the past 4 years. As more new online job ads appear on the internet, more people can find work, and fewer must file for unemployment insurance – hence the <negative> sign on the correlation coefficient. What's more, the correlation improves to -0.80 when looking at the one-week lagged value of Hiring Demand, supporting the hypothesis that Hiring Demand leads UI claims by a week. (Remember that the "best correlation" possible is -1.0 when two variables move in opposite directions).

Given the strength and robustness of this relationship, we can forecast changes to UI Claims data using the number of new online job ads. WANTED Technologies predicts that new UI Claims will fall by 18,000 on a seasonally adjusted basis for the week ending January 2^nd. Read more »

UI Claims Rise; Forecast of -6,000 for Next Week

By Charles Thibault on December 18, 2009 in Unemployment Insurance Claims.

The Department of Labor announced this morning that new UI claims increased by 7,000 for the week ending December 5^th. This corresponds to the movements we've seen in Hiring Demand: improving greatly in October/November but softening during this first half of December.

The correlation between the number of new online job ads (Hiring Demand) and unemployment insurance claims has been -0.72 over the past 4 years. As more new online job ads appear on the internet, more people can find work, and fewer must file for unemployment insurance – hence the <negative> sign on the correlation coefficient. What's more, the correlation improves to -0.80 when looking at the one-week lagged value of Hiring Demand, suggesting that Hiring Demand leads published measures of labor market dynamics. (Remember that the "best correlation" possible is -1.0 when two variables move in opposite directions).

Given the strength and robustness of this relationship, we can forecast movements in the seasonally adjusted value of new Unemployment Insurance Claims: WANTED Technologies predicts that new UI Claims will fall by 6,000 on a seasonally adjusted basis for the week ending Dec.19.

The following graph shows the historical relationship between the number of new online jobs and new Unemployment Insurance Claims, on a seasonally unadjusted basis.

Click chart to view full size

UI Claims Rise as Job Ads Fall Slightly

By Charles Thibault on December 11, 2009 in Unemployment Insurance Claims.

The Department of Labor announced this week a rise of 17,000 new UI claims, on a seasonally adjusted basis. This matches the slight fall we saw in our Hiring Demand Indicators .

This week, Hiring Demand grew only 3.9% on a seasonally unadjusted basis. Over the past 5 years, the first week of December usually sees a little bit of a rebound in Hiring Demand. This year's "post-Thanksgiving rebound" was the lowest we've seen in 5 years. This is what drove new UI claims upward. Even last year, when the economy took a huge hit, the first week of December saw Hiring Demand rebound almost 25% after Thanksgiving.

Table: Week-over-Week % Growth, Hiring Demand Indicators, First week of December

Date	Growth Compared to Prior Week
12/3/2005	6.1%
12/2/2006	16.0%
12/8/2007	6.5%
12/6/2008	24.6%
12/5/2009	3.9%

The graph below shows the historical relationship between Hiring Demand Indicators (the number of new online job ads) and seasonally unadjusted Unemployment Insurance claims. The UI claims axes has been inverted: as new job ads appear online, fewer people must file for unemployment insurance. The correlation between the two variables, over the past 4 years, has been -0.72. What's more, the correlation between new UI claims and the one-week lagged value of Hiring Demand improves to -0.78, suggesting that Hiring Demand leads new UI claims.

Click chart to view full size

UI Claims Improving on Steady Hiring Demand Trend

By Charles Thibault on December 3, 2009 in Unemployment Insurance Claims.

The Department of Labor announced this morning another drop in the number of new UI claimants. This week, there were 5,000 fewer claims on a SA basis (seasonally adjusted). This comes after last week's impressive (or surprising) drop of 39,000 claimants.

Since new UI claims reached a peak in late March 2009, they have trended downwards 3% a month on average. Hiring Demand (the number of new online job ads) has improved at an average rate of 1% a month since then too.

Last week's report of a drop of 39,000 claimants came as a surprise. Some have suggested that the economic conditions we're in have "tricked" the seasonal adjustment factors. Bradford DeLong, for example, suggests that because there aren't as many construction workers employed now compared to historical levels, the seasonal increase in new UI claims that comes from them being laid off right before Thanksgiving didn't really happen this year.

Our data, however, confirms that last week's improvment of 39,000 UI claims was in fact "real". (The initial report was for 35,000). Over the past several years, the number of new online job ads usually drops about 24% during Thanksgiving week. This year, the drop was only 11.6%. In other words, given the seasonal patterns we've seen in our data over the past five years, the improvement in the UI Claims report make sense:

Year	% Change HDI, Thanksgiving Week
2005	-24.2%
2006	-27.0%
2007	-25.7%
2008	-21.1%
2009	-11.6%

What makes us think that there's any relationship between this lower than expected drop in new online job ads and the sudden improvement in new UI claims?
Read more »

Increase in UI Claims Masked by Revisions; Thanksgiving Seasonal Hit Next Week

By Charles Thibault on November 19, 2009 in Unemployment Insurance Claims.

Although the Department of Labor announced this morning that New Unemployment Insurance Claims remained unchanged, the critical nuance is that they remained unchanged "from the previous week's revised figure of 505,000". Last week's unrevised figure was 502,000. So, in fact, and as we had foretold last week, new UI Claims have increased by 3,000 since last week.

The level of Hiring Demand has also remained unchanged on a seasonally unadjusted level, even as new UI claims dropped by 53,000. New online job ads fell by only 1,700.

The following graph, where the UI Claims axis has been inverted to facilitate the visual interpretation of the relationship, shows how the two variables have been moving in tandem over the past 4 years:

Click chart to view full size

Positive UI Report Driven By Seasonal Factor – Expect Bad Report Next Week

By Charles Thibault on November 13, 2009 in Unemployment Insurance Claims.

The Department of Labor announced yesterday that New Unemployment Insurance Claims fell by 12,000 on a seasonally adjusted basis.

Seasonally adjusted counts are driven by seasonally unadjusted counts and a seasonal correction factor. On a seasonally unadjusted basis, new UI Claims rose 47,000. This was driven by a drop of 40,000 new online job ads two weeks ago. Last week, new online job ads rose by only 16,000.

The correlation between Hiring Demand (new online job ads, weekly) and New Unemployment Insurance Claims has been -0.71 over the past four years. As new job ads appear online, more people can find work, and fewer must file unemployment insurance claims – hence the negative sign on the correlation coefficient. What's more, the correlation between the one-week lagged value of new online jobs and and new UI claims is -0.77, which supports the hypothesis that Hiring Demand is a leading indicator of published labor market data. Remember that a correlation coefficient is bounded between -1 and 1, where values of -1 or 1 imply a perfect relationship between two variables (you can usually only get a perfect correlation if you correlate a variable with itself, which isn't of much use…). So Hiring Demand closely tracks new UI Claims.

Click chart to view full size

What can we expect for next week's report? Three factors are at play: new UI claims on a seasonally unadjusted basis, the seasonal correction factor (which produces the seasonally adjusted count), and the number of new online job ads.

« Older Entries