Washington, D.C., USA: The number of individuals who filed for unemployment insurance for the first time (Initial claims) during the week ended June 16, was a seasonally adjusted 218,000 the U.S. Department of Labor said Thursday in it’s Unemployment Insurance Weekly Claims Report. This is a decrease of 3,000 from the previous week’s revised level.
Economists consensus had forecast claims rising to 220,000 in the latest week. Claims have now declined for four straight weeks. The labor market is viewed as being near or at full employment, with with the jobless rate at an 18-year low of 3.8 percent. The unemployment rate has dropped by three-tenths of a percentage point this year and is near the Federal Reserve’s forecast of 3.6 percent by the end of this year.
The previous week’s level was revised up by 3,000 from 218,000 to 221,000. The 4-week moving average was 221,000, a decrease of 4,000 from the previous week’s revised average. The previous week’s average was revised up by 750 from 224,250 to 225,000.
Economists expect the worker shortage will soon spur faster wage growth and boost inflation. The Fed last week raised interest rates for a second time this year and forecast two more rate hikes by the end of 2018. The U.S. central bank described the labor market as “strong.”
The claims report also showed the number of people receiving benefits after an initial week of aid increased 22,000 to 1.72 million in the week ended June 9. The four-week moving average of the so-called continuing claims slipped 4,750 to 1.72 million, the lowest level since December 1973.
Seasonally Adjusted Data
The advance seasonally adjusted insured unemployment rate was 1.2 percent for the week ending June 9, unchanged from the previous week’s unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending June 9 was 1,723,000, an increase of 22,000 from the previous week’s revised level. The previous week’s level was revised up 4,000 from 1,697,000 to 1,701,000. The 4-week moving average was 1,722,500, a decrease of 4,750 from the previous week’s revised average. This is the lowest level for this average since December 8, 1973 when it was 1,715,500. The previous week’s average was revised up by 1,000 from 1,726,250 to 1,727,250.
The advance number of actual initial claims under state programs, unadjusted, totaled 205,583 in the week ending June16, a decrease of 11,706 (or -5.4 percent) from the previous week. The seasonal factors had expected a decrease of 8,417 (or -3.9 percent) from the previous week. There were 228,883 initial claims in the comparable week in 2017.
The advance unadjusted insured unemployment rate was 1.1 percent during the week ending June 9, unchanged from the prior week.
The advance unadjusted number for persons claiming UI benefits in state programs totaled 1,585,437, an increase of 25,680 (or 1.6 percent) from the preceding week. The seasonal factors had expected an increase of 5,103 (or0.3 percent) from the previous week. A year earlier the rate was 1.3 percent and the volume was 1,795,184
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.