Unemployment Insurance Claims – Jobs. Trends. Insight.

Equity Markets Up on UI Claims Data

By Charles Thibault on November 5, 2009 in Unemployment Insurance Claims.

The Department of Labor announced a fall of 20,000 new Unemployment Insurance claimants, on a seasonally adjusted basis. Stock markets rose at least 1.5% this morning based on this data, even though we had predicted this drop in new UI claims in last week's analysis.

New UI Claims also fell on a seasonally unadjusted basis, falling 14,000 new claimants. This corresponds to a rise of 40,000 new online job ads the week before.

The relationship between new UI claims and online job ads is quite strong: the correlation between the two variables has been -0.70 over the past four years. As more job ads are posted 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 increases to -0.76 when we examine the one week lagged value of online job ads, which supports the hypothesis that Hiring Demand leads published measures of labor market dynamics. The UI Claims axes has been inverted on the graph below to facilitate interpretation.

Click chart to view full size

What can we expect from next week's UI claims report? We expect little to no change in next week's report. Two factors come into play: the number of online job and the seasonal correction parameter. We saw a drop of 44,000 new online job ads this week. This means that new UI claims will rise on a seasonally unadjusted basis. The multiplicative seasonal correction factor is moving from 1.07 to 0.95, so we're being accommodated there. In order to maintain the same levels on a seasonally adjusted basis, new UI claims need to rise to 539,000, a jump of 59,500 new claims. Given historical data, this week's drop in online job ads corresponds almost exactly to this expected rise in new UI claims (every new online jobs produce -1.36 new UI claims).

UI Claims Remain Unchanged

By Charles Thibault on October 29, 2009 in Unemployment Insurance Claims.

The Department of Labor announced this morning that new UI claims fell by only 1,000 last week, settling to 530,000 once seasonally adjusted. Based on the number of new job ads we saw over the past two weeks, we had predicted a stable to improving UI report.

On a seasonally unadjusted basis, the number of new UI claims rose by 32,00 claimants, even as the number of online job ads rose slightly by 2,000 ads. However, this is probably due to the drop of 32,000 that we saw two weeks ago.

The relationship between new UI claims and the level of online job ads is quite strong: the correlation between the two variables has been -0.70 over the past four years. As more job ads are posted online, 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 increases to -0.76 when we examine the one week lagged value of online job ads, which supports the hypothesis that Hiring Demand leads published measures of labor market dynamics. The second lag stays strong at -0.72 as well. The UI Claims axes has been inverted on the graph below to facilitate interpretation.

Click chart to view full size

What can we expect from next week's UI Claims report? The number of online job ads rose by 2,000 last week and again by 31,000 this week, settling to 371,000. The multiplicative seasonal correction factor is moving from 92.9 to 93.8, which is almost no change at all. The influx of new job ads should drive the seasonally unadjusted UI claims count downwards. With a fixed seasonal correction factor, new Unemployment Insurance Claims should fall again.

Don't Believe "Softness" of Labor Market Based on this Week's UI Claims

By Charles Thibault on October 22, 2009 in Unemployment Insurance Claims.

The Department of Labor announced this morning an increase of 11,000 new UI claims on a seasonally adjusted basis, just as we had predicted last week.

However, most of this is due to the seasonal fluctuation parameter. The variance around the "true number of new UI Claims on a seasonally adjusted basis" can be greater when a data series goes through high levels of seasonal fluctuations. That's what happened this week. The multiplicative seasonal adjustment factor went from 1.02 to 1.15, which means that we expected a drop in new UI claims of about 13% due to seasonal fluctuations alone. If new UI claims don't fall enough on a seasonally unadjusted basis, they grow on a seasonally adjusted basis. We had seen a drop in new job ads last week, which meant we were expected more UI claims. This drop in the number of job ads, in addition to the severity of the seasonal fluctuation, led to this week's "negative" report.

So, for example, CNBC interpreted the news as "indicating the labor market remained fragile despite some signs of an economic recovery." We did predict a rise in new UI Claims, but that was mostly driven by a very severe change in the seasonal adjustment factor. Had the seasonal correction factor been 1.13 instead of 1.15, seasonally adjusted UI claims would have remained unchanged.

Remember that the relationship between new UI claims and the level of online job ads is quite strong: the correlation between the two has been -0.70 over the past four years. What’s more, the correlation increases to -0.76 when we examine the one week lagged value of online job ads, which supports the hypothesis that Hiring Demand leads published measures of labor market dynamics. As more job ads are posted online, more people can find work, and fewer must file for unemployment insurance – hence the negative sign on the correlation coefficient.

The UI Claims axes has been inverted on the graph below to facilitate interpretation.

Click chart to view full size

Hiring Demand fell again this week, dropping from 336,000 new online job ads to 330,000. This drop of only 6,000 new job ads is much less severe than the drop of 36,000 we saw the week before. What's more, the seasonal adjustment parameter is swinging back the other way, from 1.15 to 1.075. Combining these two factors, we predict improvements in next week's UI claims report, putting us back "on trend". (Hiring Demand dropped, but the seasonal coefficient on UI claims overcomes this).

UI Claims Keep Improving

By Charles Thibault on October 17, 2009 in Unemployment Insurance Claims.

As we predicted last week based on improving levels of online job ads, the Department of Labor announced this week that new Unemployment Insurance Claims fell by 10,000 claimants. On a seasonally adjusted basis, there were 514,000 new UI claimants.

The relationship between new UI claims and the level of online job ads is quite strong: the correlation between the two has been -0.70 over the past four years. What’s more, the correlation increases to -0.76 when we examine the one week lagged value of online job ads, which supports the hypothesis that Hiring Demand leads published measures of labor market dynamics. As more job ads are posted online, more people can find work, and fewer must file for unemployment insurance – hence the negative sign on the correlation coefficient.

The UI Claims axes has been inverted on the graph below to facilitate interpretation.

Click chart to view full size

The number of new online job ads fell by 36,000 last week, settling at 332,000. The seasonal adjustment factor on new UI Claims is moving from 1.02 to 1.15, which means that we’re expecting fewer new UI Claims on a seasonally unadjusted basis. These two factors – a drop in new job ads but a rise in the multiplicative seasonal factor – combine such that we predict a worsening of new UI Claims in next week's report. (We would need the multiplicative seasonal adjustment to be smaller to accommodate more UI claims when new job ads dry up).

UI Claims Improve Again

By Charles Thibault on October 8, 2009 in Unemployment Insurance Claims.

Last week, we reported that UI claims had worsened despite an improving trend.

This week's Unemployment Claims Report from the Department of Labor confirms this improving trend. After an increase in new UI claims from 534,000 to 554,000 in last week's report, new UI claims fell by 33,000 to 521,000 in this week's report. This substantial improvement puts new UI Claims "back on trend".

There were 19,000 fewer new online job ads last week, which made new UI claims rise by 3,757 on a seasonally unadjusted basis. Fewer online job ads means that the unemployed cannot find work, increasing Unemployment Insurance Claims. The correlation between new online job ads and new UI claims is -0.69 over the past 4 years (both are seasonally unadjusted). The graph below, where the UI Claims axis has been inverted to facilitate interpretation, shows this relationship.

Click chart to view full size

Next week's report has quite a bit of forecast variance around it: the multiplicative seasonal correction factor is moving from 0.86 to 0.98. In other words, for next week's report, we are expecting an increase of 14% in unadjusted new UI claims because of seasonal fluctuations alone. Given recent robustness in Hiring Demand, we expect another positive report from the Department of Labor next week (new online job ads won't fall by so much that new UI claims will rise enough to increase the seasonally adjusted level).

UI Claims Slip Despite Improving Trend

By Charles Thibault on October 1, 2009 in Unemployment Insurance Claims.

The Department of Labor announced an increase of 17,000 new Unemployment Insurance Claims on a seasonally adjusted basis. These now total 551,000. On a seasonally unadjusted basis, new UI claims also rose by slightly less than 6,000 – to 444,000 – even as the number of new online job ads rose by 35,000.

This week's deterioration can be explained by a 56,000 slip in postings two weeks prior. The correlation between new UI claims and new online job ads has been -0.7 over the past 4 years. The correlation between new UI claims and the one-week lagged value of new online job ads has been -0.76, which supports the hypothesis that new UI claims are a leading economic indicator. What's more, the correlation between new UI claims and the two-week lagged value of new online job ads has been -0.72, which means that a dry spell in job ads can affect UI claims as much as two weeks out. (The UI claims axes has been inverted to facilitate the analysis of this negative relationship).

Click chart to view full size

The UI claims 4-week moving average , which smooths out variability, was not adversely affected and fell from 554,250 to 548,000 new claims a week.

We expect an improving UI claims report next week. The seasonal correction factor is in play, as always, and new UI Claims would have to rise by 30,000 on a seasonally unadjusted basis to produce a rise in the seasonally adjusted level. This worsening of UI claims on a seasonally unadjusted basis would have to come despite improvements of 18,000 and 36,000 in the number of new online job ads in the past two weeks..

UI Claims, Hiring Demand Improve

By Charles Thibault on September 25, 2009 in Unemployment Insurance Claims.

The Department of Labor announced a drop of 21,000 new Unemployment Insurance Claims, on a seasonally adjusted basis. New online job ads rose by 16,000 over the same period.

As new job ads are posted to the internet, more workers can find jobs, and fewer need to file for Unemployment Insurance. The 3-year correlation between UI claims and new job ads is -0.77. The correlation between UI claims and the one week lagged value of online job ads is -0.84, supporting the hypothesis that Hiring Demand is a leading economic indicator.

Given the "flat" trend in Hiring Demand and stability in the UI seasonal coefficient, we expect that next week the Department of Labor will announce another slight drop in new UI claims.

Click chart to view full size

17,000 More Job Ads Improves UI Claims by 26,000

By Charles Thibault on September 10, 2009 in Unemployment Insurance Claims.

The Department of Labor announced this morning that there were 26,000 fewer Unemployment Insurance Claims last week, on a seasonally adjusted basis. This drop was matched by an increase of 17,000 more new online job ads posted last week.

As more job ads are posted to the internet, more people can find work and consequently fewer must file for UI claims. Over the past three years the correlation between new UI claims and new online job ads has been a very strong -0.78. What's more, the correlation between new UI claims and the one-week lagged value of online job ads has been -0.84, supporting the hypothesis that new job ads are a leading economic indicator.

On a seasonally unadjusted basis, there were 460,000 new UI claims last week. New online job ads totaled 376,000. The following time-series graph shows the historical relationship between online job ads and the number of Unemployment Insurance Claims. The UI Claims axes has been inverted to facilitate analysis.

Click chart to view full size

Next week, we expect that the number of UI claims will improve or remain stable on a seasonally adjusted basis. On a seasonally unadjusted basis the number of new claims and new online job ads will drop, as there are only 4 working days following the Labor Day weekend. The UI claims multiplicative seasonal correction factor is moving from 1.20 to 1.34 which means we expect an 12% decrease in UI claims due to 'seasonal' factors alone.

UI Claims Improve Slightly for Second Straight Week

By Charles Thibault on September 4, 2009 in Unemployment Insurance Claims.

On a seasonally unadjusted basis, there were 5,000 fewer new Unemployment Insurance Claims last week, driven by a increase of 13,000 new job ads over the same time frame.

As new online job ads are posted on the internet, more workers can find jobs and fewer must file UI claims. Over the past three years the correlation between new UI claims and new online job ads has been -0.77. What's more, the correlation between new UI claims and the one-week lagged value of new online job ads has been -0.84, supporting the hypothesis that new job ads are a leading economic indicator.

Click chart to view full size

As expected, new UI claims also fell on a seasonally adjusted basis, falling by 4,000 claims to 570,000. The 4-week moving average increased slightly by adding 4,000 more claimants. This, however, was mostly caused by the jump of 19,000 new UI claims four weeks ago.

Next week, we expect that more workers will file for UI Claims on a seasonally unadjusted basis. The week before Labor Day (which will be reported on next week), usually means the end of seasonal employment, which in turn means more UI claims. The multiplicative seasonal correction factor is moving from 1.26 to 1.195, which supports this thesis (i.e. we need to multiply by a smaller number to get the same count on a seasonally adjusted basis). Given this week's increase in job postings, we expect a stable to slightly improving UI forecast next week as well.

UI Claims Drop Very Slightly Supported by 6,000 More Internet Job Ads

By Charles Thibault on August 28, 2009 in Unemployment Insurance Claims.

The Department of Labor announced yesterday that new Unemployment Insurance claims dropped by 10,000 last week. The 4-week moving average followed by dropping 4,750 claimants to 566,250. Both these drops correspond to an increase of 6,000 more new online job ads posted last week.

This small positive movement (from an economic sense) follows last week's forecast of a decrease in new UI claims.

The 3-year historical correlation between new UI claims and job ads is -0.76. The historical correlation between new UI claims and the one-week lagged value of new job ads is -0.83, which supports the hypothesis that Hiring Demand is a leading economic indicator.

The chart below follows the number of new online job ads and the number of new UI claims, on a seasonally unadjusted basis. As new job ads are posted to the internet the economy is able to absorb workers, and UI claims decrease. The UI axes is inverted to facilitate analysis.

Click chart to view full size

Notwithstanding unexpected fluctuations in next week's jobs posting data, we expect at most a small improvement in new UI claims. The expectation of almost no change is driven by this slight increase of 6,000 new job ads and stability in the UI seasonal correction factor.

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