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UI Claims Drop Slightly – Situation Weak but Stable

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

The overall outlook for the American labor market remains weak but stable. The Department of Labor announced this morning that jobless claims dropped by 13,000 compared to a week ago, on a seasonally adjusted basis. On a seasonally unadjusted basis, jobless claims dropped by only 4,192.

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The number of new job ads, on the other hand, fell by 76,000 last week to 726,500, on a seasonally unadjusted basis. This indicates that the number of jobless claims will not shrink unexpectedly – job ads lead UI claims by one or two weeks.

The number of new job ads posted the week following Memorial day week usually jumps up quite substantially. In 2007, the number of new job ads jumped by 100,000. In 2008, the number of new job ads jumped by 90,000. Although these seasonal/holiday movements are attenuated by the UI seasonal adjustment parameters, a jump of less than 10% in new job ads, or 70,000 new job ads, would indicate that the labor market situation is deteriorating.

UI Claims and Hiring Demand Point to Continuing Jobs Weakness

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

The Department of Labor reported this morning that the number of new UI claims dropped slightly on a seasonally adjusted basis to 631,000 – a decrease of 12,000 new UI claims. The 4-week moving average dipped only very slightly by 3,500 new claims, suggesting that the economy has not really picked up any significant steam.

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On a seasonally unadjusted basis, the number of new job ads posted has been stable or declining — there is no reason to expect that the number of new UI claims will shrink considerably in the next few weeks. While there were 58,000 more new job ads the week ending April 25 and another 31,000 additional new job ads the week ending May 2, there has been a drop of 9,300 and 3,500 new job ads in the past two weeks. The number of new ads placed on the three major national job boards fell by 5,300 ads last week, after three weeks of consecutive gains.

Jump in UI Claims Reflected in WANTED Hiring Demand Indicators (Update 1)

By Charles Thibault on May 15, 2009 in Unemployment Insurance Claims.

Weekly unemployment claims have become a way of determining the end of a recession. Specifically, the four-week moving average of new unemployment claims has historically peaked 8 weeks before the official start of a recovery. The four-week moving average of new claims seemed to be in a position to start declining at the start of May. Last week's report of an increase of 32,000 jobless claims reduced the probability that we're at the start of an official recovery.

Earlier, we described how WANTED Hiring Demand Indicators lead weekly unemployment insurance claims by about two weeks. The number of new job ads posted reflects the economy's ability to absorb new workers. When the number of job ads falls, more workers must file for UI benefits.

Last week's "unexpected jump" in UI claims was in fact matched in the Hiring Demand Indicators. Examining the actual count of new job ads placed during a week, and the unemployment claims that same week, we can see that this "unexpected jump" is in fact matched by a drop in the number of new job ads, as shown below. The increase of 32,000 jobless claims was matched by a drop of about 17,000 new job ads. Note that the UI claims axis is inverted to facilitate analysis.

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Changes in Hiring Demand Appear to Lead New Unemployment Claims by Two Weeks

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

WANTED's Weekly Hiring Demand figures appear very closely linked with weekly new claims for unemployment insurance. In fact, based on the chart below, we see that changes in weekly Hiring Demand may precede new unemployment claims by approximately two weeks.

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Why would the number of new job ads–WANTED's Hiring Demand data–be related to unemployment insurance claims?

The number of new ads measures the economy's ability to absorb workers. As the number of job ads falls, so does the economy's ability to absorb new workers, leading to increases in UI claims. Conversely, when the number of job ads increases, more workers can find employment opportunities, and not as many people need to file for unemployment insurance.

For those who follow economic indicators, the number of new job ads can be very helpful as an early indication of the direction and magnitude of the trend in new unemployment claims. The weekly unemployment claims is a more timely measure than the monthly Non-Farm Payroll Report and helps guide economic outlook during the interval between monthly BLS Non-Farm Payroll releases. Weekly unemployment insurance claims have a 5-day reporting lag, while monthly employment counts have a minimum 3-week reporting lag. Read more »

What Does "Full Employment" Mean in the Post-Recession Economy?

By Juli Morris on May 5, 2009 in Labor Market Dynamics.

An article yesterday from Bloomberg.com looks at how economists are reconsidering the level of "natural unemployment"–an unemployment rate that does not cause inflation to accelerate or decelerate–also referred to as "full employment." This level has rested between 5-6%, but a new "natural" could be in our future:

Fallout from the recession implies a "markedly higher" natural rate of unemployment, says Edmund Phelps, a professor at Columbia University in New York and winner of the 2006 Nobel Prize in economics. "It was 5.5 percent; maybe it will be 6.5 percent, maybe 7 percent."

That has implications for policy makers as well as workers. The Obama administration and the Federal Reserve are counting on the jobless rate to fall to a medium-term equilibrium of about 5 percent as the economy recovers. A natural rate significantly above that would drive up the annual budget deficit… A higher rate would also require the Fed to make a choice: Accept an economy with more Americans permanently out of work, or try to boost employment at the risk of heating up inflation.

BLS Reports Jobless Rates of at Least 15% in 18 Metro Areas in March

By Juli Morris on April 29, 2009 in Labor Market Dynamics.

As we reported last week, the current recession has spared no one. WANTED's Hiring Demand Indicators for all occupations showed a decline between March 2008 and March 2009, measured year-over-year. Now, today's BLS' Metropolitan Area Employment and Unemployment Summary for March indicates that unemployment rates in all 372 metropolitan areas rose in March compared with March '08.

Only one metro area, El Centro, CA, reported a jobless rate over 15% in March '08, compared to the 18 identified in March '09. The magnitude of the increase in unemployment rates is discouraging: 75 of the 372 metro areas reported an increase of at least 5 percentage points.

Source: WANTED Analytics

WANTED's hiring demand data for those 18 metro areas as of the week of April 19, 2009 shows a decline in online job ads of 28% from the same period in 2008.

The largest jobless rate increase from March '08, unfortunately, belongs to this author's hometown, Elkhart-Goshen, Indiana. Residents there saw an increase in their unemployment rate of 13%.

Unemployment Claims and Timing the End of a Recession

By Bruce Murray on April 14, 2009 in Unemployment Insurance Claims.

An excellent post from CalculatedRisk with an explanatory discussion on how trends in weekly unemployment claims may signal the end of a recesssion.

Economists Surveyed by WSJ Forecast 2.6 Million Job Losses in Next 12 Months

By Juli Morris on April 10, 2009 in Labor Market Dynamics.

The Wall Street Journal today reported the results of its latest forecasting survey of economists, which predicts an end to the recession in September. The economists surveyed did not see any good news on the unemployment front in 2009, however:

"Indeed, economists' prospects for the labor market remain bleak. Just 12% of the economists expect the unemployment rate to fall some time this year. More than a third of respondents expect the jobless rate to peak in the first half of 2010, while about half don't see unemployment declining until the second half of 2010. By December of this year, the economists on average expect the unemployment rate to reach 9.5%, up from the 8.5% reported for March."

The survey did report some good news for job losses in 2009-2010:

"They do see the rate of decline slowing, forecasting 2.6 million job losses in the next 12 months, compared with the 4.8 million jobs lost in the previous period."

WANTED' Hiring Demand Indicators are a three-month leading indicator of changes in nonfarm employment, and we will be watching closely for signs of this decline in job losses as one of the earliest signs of economic recovery.

(Note: WANTED Technologies is the parent company of the Hiring Demand Indicators service and this Web site.)

Preliminary report from BLS shows decline of 663,000 jobs in March (update 6)

By Juli Morris on April 3, 2009 in BLS Nonfarm Employment.

Employment fell by 663,000 jobs in March, according to the preliminary report from the Bureau of Labor Statistics, less than the loss of 752,000 forecast by WANTED Technologies. The unemployment rate rose from 8.1 to 8.5 percent — the highest level since 1983.

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March is the fourth consecutive month that job declines topped 600,000 in the so-called "Employment Situation" report — the first time that has happened since the government began collecting data in 1939.

Economists had estimated a decline of 654,000, according to a poll by Thomson/Reuters. TrimTabs Investment Research had estimated a loss of between 700,000 and 750,000 jobs.

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