· At
the margin, the labor market continues to show signs of firming ... but
just a bit. The latest indication is that last week, initial claims for
unemployment insurance fell a sharp 24,000 to 601,000 from a little
revised 625,000 during the prior two weeks. Initial claims are down from
their March peak of 674,000. Moreover, the four-week average of claims,
which smoothes out some of the volatility in the weekly numbers, fell to
621,750 which was its lowest level since since mid-February. Still, the
level remained up by two-thirds from the year ago level. The Consensus
expectation was for 615,000 claims last week.
· The
Labor Department indicated that the largest increases in initial claims
for the week ending May 30 were in Connecticut (+816), Louisiana (+809),
Tennessee (+672), Arizona (+618), and Nebraska (+576), while the largest
decreases were in Florida (-6,655), Illinois (-4,496), Michigan
(-4,385), California (-3,551), and Texas (-2,886).
· Despite the indication of fewer jobs lost, new job creation remains under pressure. Continuing claims for unemployment insurance, which provide an indication of workers' ability to find employment, rose to another record high of 6,816,000, more than twice the year ago level. Further indicating that the job market remains weak, the four-week average of continuing claims also rose to another record of 6,750,500. The series dates back to 1966.
· Further indicating the labor market's softness was that the insured unemployment rate held at 5.1% for the second consecutive week. That level was more than double last May and the highest level since 1983. During the last ten years there has been a 93% correlation between the level of the insured unemployment rate and the overall rate of unemployment published by the Bureau of Labor Statistics. Clearly, the latest weekly figure understates labor market distress in some states.
· The highest insured unemployment rates in the week ending May 23 were in Michigan (7.2 percent), Oregon (6.9), Puerto Rico (6.4), Nevada (6.3), Pennsylvania (6.2), Wisconsin (5.8), Arkansas (5.4), North Carolina (5.4), Illinois (5.3), and South Carolina (5.3).
· The unemployment insurance claims data is available in Haver's WEEKLY database and the state data is in the REGIONW database.