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 7/31/08 For wk 7/26 2008 | ||||||||||||
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Highlights
Congress's emergency benefit extension program drove initial jobless claims through the roof in the July 26 week, the effects of a program that the Labor Department suspects will fade by mid August. Initial claims surged 44,000 to 448,000 for the highest level since April. The four-week average rose 11,000 to 393,000. These results completely took forecasters by surprise.
The Labor Department, in comments to Market News International, warned that the program has caused a "structural" though temporary shift in the series. The Labor Department said many who had previously exhausted their unemployment benefits are now eligible for new claims. The Labor Department said it cannot quantify the degree of the effect of the program's 13-week emergency extension. Continuing claims also showed enormous pressure, up 185,000 to 3.282 million for their sharpest one-week gain in more than 10 years.
Given an expected reading in GDP at 8:30 a.m. ET, markets were responding to this report despite the fact that the jump is tied to a special factor. Treasury yields were down as was the dollar.
Initial jobless claims jumped sharply higher in the week ending July 19 week, rising 34,000 to 406,000 for the highest level since March. Much of the surge appears to have been due to temporary layoffs for regular, mid-summer retooling of plants by auto manufacturers. The timing of these layoffs is difficult to seasonally adjust and this year manufacturers may be engaging in more than normal retooling to shift more to gas efficient vehicles. The four-week average, especially important when seasonal adjustments become a factor, stayed in trend at 382,500 for a much more mild 4,500 gain in the week.
Jobless Claims Consensus Forecast for 7/26/08: 398,000
Range: 375,000 to 420,000
![[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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