The Department of Labor released its initial and revised estimates of initial and continuing unemployment insurance claims for the previous two weeks. The figures for initial claims came in flat on a weekly basis at a seasonally adjusted 374,000. The 374,000 figure equates to an increase of 1,500 claims for the four week moving average. For the month of August as a whole, the four week moving average initial claims numbers are up 4,000 from the final week of July.
The initial claims figures come in at on a high frequency basis – every Thursday – and sometimes the weekly ups and downs drown out the more important issue of the longer term trend, and this trend continues to be something to worry about. The trend for all four quarter of 2011 indicated improvement, as is shown in the quarterly trend lines of the initial unemployment insurance claims graphical depictions, with the first and fourth quarters showing strong improvement. The first quarter of 2012 continued the trend of improvement, with claims improving from a seasonally adjusted 390,000 in the week of January to a seasonally adjusted 362,000 on the last day of March. And that’s when the improvement generally stopped, with the overall number of green dots, which represent an increase in the initial claims number overweighing the number of red dots, which represent a decrease in the initial claims figures.
What does the flat to slightly positive trend line of initial claims mean for the market? That’s a good question, because it appears the market is much more interested in policy risk associated with the presidential election than it is in the labor market risk showing up in the initial claims figures. Overall, if the September initial claims figures indicate continued flat to slightly increased labor market risk, it would make for three straight quarters of indication that things are not improving. Perhaps then the market will give the initial claims figures some more thought.
Switching to the continuing claims numbers, the one week lagged figures came in at a seasonally adjusted 3.316 million, a decrease of 5,000 from the 3.321 million of the week prior. As with the initial claims figures, the continuing claims figures improved through all of 2011 and for the first quarter of 2012, after which things have generally deteriorated, with the summer and early fall months indicating a slight increase in the trend for continuing claims.
In all, the initial and continuing unemployment insurance claims figures appear to have bottomed out for the time being. The market, though, appears to be more interested in the risks associated with the election that the risks apparent in the labor market trend figures.