Washington, D.C., USA : Filings for U.S. unemployment benefits rose last week to the highest level since late June, potentially reflecting holiday-related volatility in what otherwise has been a strong labor market.
Jobless claims increased by 3,000 to 224,000 in the week ended Nov. 17, Labor Department figures showed Wednesday. That compares with the 215,000 median estimate in a survey of economists and follows an upwardly revised 221,000 in the prior week. The four-week average, a less-volatile measure, rose to 218,500.
Analysts may pay extra attention to the data because the week included the 12th of the month, which lines up with the survey period for the Labor Department’s November employment report, due Dec. 7.
The results may also reflect volatility around the Veterans Day holiday, which was observed on the 12th, a Monday. Wildfires in California could be potentially boosting claims, as disasters are typically associated with a temporary increase.
Even with the rise, applications for unemployment benefits are hovering around historically low levels, underscoring strong demand for workers that’s helping to increase wages. Such gains along with lower taxes are supporting consumer spending, the biggest part of the economy.
Continuing claims, which are reported with a one-week lag, fell by 2,000 to 1.67 million in the week ended Nov. 10, the report showed. They are still near the lowest since 1973.
No states had estimated claims last week, according to the Labor Department.
The jobless claims data, typically due on Thursday each week, were released a day early because of the national Thanksgiving holiday on Nov. 22.
While the weekly claims data tend to be volatile, economists watch these figures for a timely read on the labor market’s health.
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.