New unemployment claims are compiled weekly to show the number of individuals who filed for unemployment insurance for the first time. An increasing (decreasing) trend suggests a deteriorating (improving) labor market. The four-week moving average of new claims smoothes out weekly volatility. Why Investors Care
| Released on 7/24/08 For wk 7/19 2008 | ||||||||||||
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Highlights
Volatility tied to seasonal adjustments pushed initial jobless claims sharply higher in the July 19 week, up 34,000 to 406,000 for the highest level since March. The four-week average, especially important when seasonal adjustments become a factor, is probably offering the more reliable indication on the labor market, at an in-trend 382,500 for a much more mild 4,500 gain in the week. The Labor Department told Market News International that a host of factors affected the week including auto retooling where weekly changes are difficult to gauge on a year-to-year basis. Calendar effects tied to July 4 and quarter-end also affected the adjustments.
Continuing claims remain elevated pointing to no improvement in underlying payroll change, that is continued contraction in the next employment report. Continuing claims fell 9,000 to 3.107 million in data for the July 12 week. A comparison with the June 14 week, which offers a month-to-month look at survey weeks of the Bureau of Labor Statistic's household survey, shows a very slim 28,000 improvement but a comparison of four-week averages shows a 32,000 rise.
Despite the fact that seasonal adjustments exaggerated the drop in initial claims, markets were responding to the data with Treasury yields and the dollar moving lower. Breaking the 400,000 level is an unwelcome headline.
Initial jobless claims rebounded in the latest week but at only a fraction of the magnitude of the prior week's drop. Initial claims rose 18,000 in the week ending July 12, following a sharp 56,000 drop in the prior week - a week shortened by the Independence Day holiday. The four-week average fell 4,500 to 376,500, little changed from the 376,000 average in the June 14 week. While initial claims have oscillated around a trend level that is not too worrisome, that cannot be said for continuing claims. Continuing claims for the July 5 week fell 81,000 to 3.122 million. But the four-week average continues to rise, up 16,500 to 3.143 million for the highest rate in 4-1/2 years. Firms appear to be both reluctant to lay off workers and reluctant to hire.
Jobless Claims Consensus Forecast for 7/19/08: 375,000
Range: 370,000 to 440,000
![[Chart]](chart.gif)
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Weekly series fluctuate more dramatically than monthly series even when the series are adjusted for seasonal variation. The 4-week moving average gives a better perspective on the underlying trend. |
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