· Initial
claims for unemployment insurance surged last week to 448,000 from
404,000 during the prior week. The latest level was the highest in five
years but it may have been upwardly biased by summer workers. The weekly
level surpassed Consensus expectations for 390,000 claims.
· As a result of the latest jump in initial claims, the four-week moving average increased to 393,000 (27.4% y/y). During June claims averaged 391,000.
· A
claims level below 400,000 typically has been associated with growth in
nonfarm payrolls. During the last ten years there has been a (negative)
76% correlation between the level of initial claims and the m/m change
in nonfarm payroll employment. Over the longer period of time, the level
of claims for jobless insurance has not trended higher with the size of
the labor force due to a higher proportion of self-employed workers who
are not eligible for benefits.
· Continuing claims for unemployment insurance during the latest week jumped 185,000 after declines during the prior two weeks. The four-week moving average of continuing claims rose and reached the highest level since early 2004.
· Continuing claims provide some indication of workers' ability to find employment and they lag the initial claims figures by one week.
· The
insured rate of unemployment rose to 2.5% from 2.3%. The latest was the
highest level since early 2004.