Washington, D.C., USA : First-time claims for U.S. unemployment benefits edged down by less than expected in the week ended December 1st, the Labor Department revealed in a report released on Thursday.
The report said initial jobless claims slipped to 231,000, a decrease of 4,000 from the previous week’s revised level of 235,000.
Economists had expected jobless claims to dip to 225,000 from the 234,000 originally reported for the previous week.
Jobless claims pulled back slightly after the upwardly revised figure for the previous week reflected the highest level since 242,000 in the week ended March 31st.
Meanwhile, the Labor Department said the less volatile four-week moving average rose to 228,000, an increase of 4,250 from the previous week’s revised average of 223,750.
The report said continuing claims, a reading on the number of people receiving ongoing unemployment assistance, fell by 74,000 to 1.631 million in the week ended November 24th.
The four-week moving average of continuing claims still crept up to 1,667,000, an increase of 250 from the previous week’s revised average of 1,666,750.
On Friday, the Labor Department is scheduled to release its more closely watched monthly employment report for November.
Employment is expected to increase by 205,000 jobs in November after jumping by 250,000 jobs in October, while the unemployment rate is expected to hold at 3.7 percent.
Why Markets Care About Unemployment Insurance Weekly Claims
Unemployment Insurance Weekly Claims – also called Jobless Claims or Initial Claims – measures the number of individuals who filed for unemployment insurance for the first time during the past week.
Unemployment Insurance Weekly Claims is the nation’s earliest economic data. The market impact fluctuates from week to week – there tends to be more focus on the release when traders need to diagnose recent developments, or when the reading is at extremes.
The usual effect is that if ‘Actual’ is less than ‘Forecast’, it is good for the dollar and vice versa.
Markets care because although it’s generally viewed as a lagging indicator, the number of unemployed people is an important signal of overall economic health since consumer spending is highly correlated with labor-market conditions. Unemployment is also a major consideration for those steering the country’s monetary policy.
An initial claim is a claim filed by an unemployed individual after a separation from an employer. The claimant requests a determination of basic eligibility for the UI program. When an initial claim is filed with a state, certain programmatic activities take place and these result in activity counts including the count of initial claims. The count of U.S. initial claims for unemployment insurance is a leading economic indicator because it is an indication of emerging labor market conditions in the country. However, these are weekly administrative data which are difficult to seasonally adjust, making the series subject to some volatility.
Continued Weeks Claimed
A person who has already filed an initial claim and who has experienced a week of unemployment then files a continued claim to claim benefits for that week of unemployment. Continued claims are also referred to as insured unemployment. The count of U.S. continued weeks claimed is also a good indicator of labor market conditions.
Continued claims reflect the current number of insured unemployed workers filing for UI benefits in the nation. While continued claims are not a leading indicator (they roughly coincide with economic cycles at their peaks and lag at cycle troughs), they provide confirming evidence of the direction of the U.S. economy
Seasonal Adjustments and Annual Revisions
Over the course of a year, the weekly changes in the levels of initial claims and continued claims undergo regularly occurring fluctuations. These fluctuations may result from seasonal changes in weather, major holidays, the opening and closing of schools, or other similar events. Because these seasonal events follow a more or less regular pattern each year, their influence on the level of a series can be tempered by adjusting for regular seasonal variation. These adjustments make trend and cycle developments easier to spot. At the beginning of each calendar year, the Bureau of Labor Statistics provides the Employment and Training Administration (ETA) with a set of seasonal factors to apply to the unadjusted data during that year. Concurrent with the implementation and release of the new seasonal factors, ETA incorporates revisions to the UI claims historical series caused by updates to the unadjusted data.
Other economy news : U.S. Q3 unit labor costs revised lower
U.S. unit labor costs rebounded less than initially thought in the third quarter and the decline in the prior period was sharper than previously estimated, suggesting moderate growth in wage inflation.
The Labor Department said on Thursday that unit labor costs, the price of labor per single unit of output, rose at a 0.9 percent annualized rate, instead of increasing at a 1.2 percent pace as reported last month.
Unit labor costs in the April-June period declined at a 2.8 percent rate, the largest drop since the second quarter of 2014. Unit labor costs were previously reported to have dropped at a 1.0 percent pace in the second quarter.
Unit labor costs rose a downwardly revised 0.9 percent rate compared to the third quarter of 2017. They were previously reported to have increased at a 1.5 percent pace on a year-on-year basis.
Though wage growth has picked up in recent months, the unit labor costs data suggests a burst in wage inflation is unlikely. There has not been a rapid increase in wages even as the unemployment rate has dropped to near a 49-year low of 3.7 percent.
The increase in hourly compensation in the third quarter was revised down to a 3.1 percent rate from the 3.5 percent rate reported last month.
Worker productivity increased at a revised 2.3 percent annualized rate rather than the 2.2 percent estimated last month. Productivity grew at a 3.0 percent rate in the second quarter.