Unemployment Insurance Claims – Jobs. Trends. Insight.

Labor Market Still Shaky According to UI Data, Hiring Demand

By Charles Thibault on August 21, 2009 in Unemployment Insurance Claims.

The 4-week moving average of new Unemployment Insurance Claims went up for the second week in a row. During a "recovery" period we would like to see a smooth monotone improvement in the 4-week moving average, as the moving average process is supposed to smooth out any irregularities.

There were 15,000 more claimants this week compared to last on a seasonally adjusted basis, pushing the 4-week moving average up by 4,250 claimants to 570,000.

We are expecting another increase in new UI Claims next week in both seasonally adjusted and unadjusted terms. The number of new job ads fell by 15,000 this week after falling 26,000 the week before, which will push seasonally unadjusted UI claims upward. The critical factor is always the UI seasonal adjustment factor. The multiplicative adjustment factor is going from 1.16 last week to 1.27 this week, which means that seasonal factors should actually reduce the number of new claims (seasonally adjusted = unadjusted * seasonal factor). An increase in the seasonal factor means we're expecting a drop in unadjusted data, so we need to 'prop it up more' to maintain the same seasonally adjusted level). So both a drop in new job ads and an unfavorable seasonal factor lead us to believe that UI claims will rise again next week.

The following charts the number of new job ads posted online and the number of weekly UI claims, on a seasonally unadjusted basis. As new job ads flood the internet the economy is able to absorb workers and UI claims decrease. The correlation between new UI claims and job ads is -0.76. The 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 UI axes has been inverted to facilitate this analysis. (Please also note that the sources selected for this post are different than the sources used in previous UI claims posts).

Click chart to view full size

UI Claims Data Allows for Cautious Optimism

By Charles Thibault on August 14, 2009 in Unemployment Insurance Claims.

Combined with slowing job losses and increases in Hiring Demand (which are a leading indicator), this week's Unemployment Insurance Claims report cements the idea that an economic recovery is on the horizon. After 9 weeks of almost uninterrupted improvements this week's data allows for cautious optimism.

On a seasonally adjusted basis, the 4-week moving average of new jobless claims rose by 8,500 claims. However, this slight increase does not put at risk the recent trends in labor market data.

Professor Hamilton has much discussed how the National Bureau of Economic Research (NBER) has identified the 8th week after the peak in UI claims as the start of recovery. The 4-week moving average of new UI claims peaked on April 4th, when there were 658,750 claims. That was 18 weeks ago. UI claims dropped consistently for several weeks but picked up again May, which was matched in our Hiring Demand Indicators. On May 30th, there was a "local maximum" for UI claims, at 632,250 claims. That was 9 weeks ago. Professor Hamilton figures that there's 85% chance that April 4th will be identified as the peak.

On a seasonally unadjusted basis, there were 13,000 more claimants this week as the number of new job ads fell by 56,000. The week before, new claims had fallen by 45,000 claims as job ads rose by 14,000. The following time series plot new UI Claims and the number of new job ads, on a seasonally unadjusted basis. The UI claims axes has been inverted to facilitate analysis.

Click chart to view full size

Relief from UI Claims Data

By Charles Thibault on August 6, 2009 in Unemployment Insurance Claims.

The Department of Labor reported a drop of 38,000 new Unemployment Insurance claims on a seasonally adjusted basis. The 4-week moving average dropped by 4,750 claims, also an improvement.

There had been 30,000 new additional claimants in each of the two preceding releases, which had put the 4-week moving average at risk of hitting an inflection point and moving back in a negative direction. The 4-week moving average is important because the NBER usually identifies the start of the recovery as occurring 8 weeks after the peak in the 4-week moving average of new claims.

On a seasonally unadjusted basis, there were 48,300 fewer claimants. This corresponds to an increase of 120,000 new job ads two weeks ago. Last week, new ads dipped slightly by 31,000 ads. However, the DOL expects an increase of claims on a seasonally unadjusted basis for next week's release, as the seasonal correction parameter will move from 84.2 to 86.0 for the week ending August 8th.

The graph below shows the historical relationship between the number of new UI claims and the the number of new job ads, on a seasonally unadjusted basis. The axes for UI claims has been inverted to facilitate visual interpretation.

Click chart to view full size

UI Claims Jump Even As Hiring Demand Grows

By Charles Thibault on July 30, 2009 in Unemployment Insurance Claims.

The Department of Labor announced this morning that new Unemployment Insurance Claims rose by 25,000 on a seasonally adjusted basis to 559,000, which was a little bit of a surprise.

On a seasonally unadjusted basis, the number of new claims dropped by 78,111. Last week, the number of new job ads jumped by 84,000 on a seasonally unadjusted basis. As new job ads increase, more workers are absorbed into the labor force, reducing UI claims.

The 4-week moving average dropped by 8,250 claims. However, this week's jump puts the 4-week moving average very close to reversing its "improving" trend. If next week's release puts new UI claims above 569,000, the 4-week moving average will increase, reversing the trend. Remember that the NBER has identified the "start" of the recovery period as occuring 8 weeks after the peak in new UI claims in the past several recessions. Stock markets have been bullish, however.

Our Hiring Demand Indicators saw some slight weakness in mid-July, but have picked up since then. Given last week's improvement in the number of new job ads, and stability in the seasonal correction coeficients for next week, we expect that new UI claims will fall next week on a seasonally adjusted basis.

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Unemployment Insurance Claims Still Signaling Some Weakness

By Charles Thibault on July 23, 2009 in Unemployment Insurance Claims.

The Department of Labor announced this morning that new Unemployment Insurance claims rose by 30,000 from last week's level on a seasonally adjusted basis, pointing to some continued weakness and volatility in the US labor market. There were 554,000 new UI claims last week.

Continued claims dropped by 88,000 claimants to 6,225,000. Two weeks ago, new claims had dropped by 45,000, which lowered last week's continued claims. We can expect seasonally adjusted continued claims to increase following this week's jump in new UI claims.

The 4-week moving average of new UI claims dropped by 19,000 claimants. This points to a somewhat improving economy, but an increase in new UI claims to a level above 617,000 in next week's report would change the trend in the 4-week moving average.

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UI Claims Drop as Economy Settles

By Charles Thibault on July 16, 2009 in Unemployment Insurance Claims.

We reported last week that Hiring Demand was poised for upward trending. Reductions in new weekly unemployment insurance claims, as announced this morning by the Department of Labor, support this interpretation.

On a seasonally adjusted basis:

- Initial claims dropped by 47,000 new claims to 522,000.

- The 4-week moving average of new claims dropped by 22,500, a substantial drop. This is the third drop in a row, and the second "substantial" drop in the 4-week moving average. Recall that the National Bureau of Economic Research usually signals the start of an economic recovery 8 weeks after the peak in the moving average of weekly unemployment claims.

On a seasonally unadjusted basis:

- Initial claims jumped, as expected (from seasonal coefficients) and presaged by a substantial drop in weekly new job ads last week. Indeed, weekly new job ads had dropped by 120,000 new ads to 635,000.

The graph below shows the historical relationship between new job ads, posted on a weekly basis, and seasonally unadjusted new UI claims. The UI Claims axes has been inverted to facilitate interpretation – as the number of new job ads falls, businesses cannot support new employees, and more workers are forced to register unemployment insurance claims.

Click chart to view full size

There has been talk that the "timing" of automotive factory closing is causing an artificial drop in the weekly unemployment insurance claims. However, slowing drops in total employment, improvements in UI claims data, and Hiring Demand that is inching its way back up to consistent month-over-month growth all point to a stabilizing situation, with the start of a recovery "just a matter of time".

Unexpected Drop in New UI Claims – Continued Claims Increase

By Charles Thibault on July 9, 2009 in Unemployment Insurance Claims.

The Department of Labor released its weekly unemployment insurance claims data, which corroborates our analysis that despite some slippage, the labor market situation has stabilized and is in a position to start improving.

On a seasonally unadjusted basis:

- New Claims increased by 17,612 as Hiring Demand dropped by 16.3% or 122,700 new job ads.

- On a seasonally unadjusted basis, Continued Claims dropped by 34,900 claimants.

However, on a seasonally adjusted basis:

- New Claims dropped by a staggering 52,000 claimants.

- The four-week moving average of New Claims dropped by 10,000 claimants to 606,000.

- Continued Claims increased by 159,000 claimants.

The interpretation of this week's data is well tied together by the Associated Press: "While layoffs are slowing, unemployed workers are having a difficult time finding new jobs." A robust month of May may have helped reduce new claims, but recent slippage in Hiring Demand means that unemployment workers will find it harder to exit UI programs.

The following graph shows the historical relationship between UI claims and WANTED Hiring Demand. The UI Claims axis has been inverted to facilitate analysis.

Click chart to view full size

Weekly UI Claims: – "Recovery, Where are You? … Come in Please."

By Charles Thibault on July 2, 2009 in Unemployment Insurance Claims.

The Department of Labor reported this morning that initial jobless claims dropped by 16,000 on a seasonally adjusted basis. The 4-week moving average dropped 2,750, a very modest improvement. Combined with flat Hiring Demand, and another large reduction in the overall US workforce (-467,000 in Nonfarm Payroll Employment), we're still looking for a significant turning point in the economy (increases in employment or output).

On a seasonally unadjusted basis, initial jobless claims dropped by almost 12,000. This is matched with last week's 16,800 increase in Hiring Demand. This week, Hiring Demand went down by 7,000 on a seasonally unadjusted basis.

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Overall, slight upward trending in Hiring Demand corresponds with fewer initial jobless claims and reductions in the rate of employment loss. However, sustained employment losses continue to point towards a weak labor market and weakening overall economy, although "the worst is behind us".

UI Claims Jump and Hiring Demand Wobbles

By Juli Morris on June 25, 2009 in Unemployment Insurance Claims.

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This morning the Department of Labor announced that new unemployment claims increased on a seasonally adjusted basis, jumping to 627,000 new claims last week, an unexpected increase from the revised 612,000 new claims from the prior week. The 4-week moving average of seasonally adjusted new unemployment claims rose slightly, increasing by 500 new claims from a revised average the prior week of 616,750.

Hiring Demand fell in the past week for the second consecutive week, following an uptick the week of June 6th. The number of new job ads, on a seasonally unadjusted basis, fell from 718,000 to 713,000. Overall, the trend in Hiring Demand in 2009 remains flat.

Combined with the monthly Nonfarm Employment Payrolls, UI and Hiring Demand data suggest that the labor market is not picking up any significant steam, although it appears to have stabilized. The economy continues to struggle, but the rate at which companies are reducing their workforces has slowed.

UI Claims Data and Hiring Demand Point to Stabilization

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

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The Department of Labor announced this morning that new unemployment claims increased slightly on a seasonally adjusted basis, moving from 605,000 new claims two weeks ago to 608,000 new claims last week. The 4-week moving average of seasonally adjusted new unemployment claims, however, has come down for the second week in a row, and for the 8th time since reaching its maximum ten weeks ago. The 4-week moving average fell by 7,000 new claims from 622,750.

Hiring Demand has not significantly picked up in the past week. The number of new job ads, on a seasonally unadjusted basis, fell from 746,000 to 696,000.

Combined with the monthly Nonfarm Employment Payrolls, UI data suggest that, even though the labor market is not picking up any significant steam, declines have subsided. The economy is still struggling, but the rate at which companies are reducing their workforces has been toned down.

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