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Economy in Brief

U.S. Initial Claims for Unemployment Insurance Surged
by Tom Moeller January 31, 2008

Last week, initial claims for jobless insurance surged to a level which now exceeds the late 2007 highs. A 69,000 w/w jump to 375,000 followed declines during the prior several weeks. The latest level is the highest since October of 2005. The difficulties of seasonal adjusting the data during the holiday season clearly played a role in the earlier declines. A more modest rise in claims to 317,000 had been generally expected.

The four-week moving average of initial claims, a measure which smoothes out most of the series' w/w volatility, rose to 325,750 (+5.0% y/y).

A claims level below 400,000 typically has been associated with growth in nonfarm payrolls. During the last six years there has been a (negative) 78% correlation between the level of initial claims and the m/m change in nonfarm payroll employment.

Continuing claims for unemployment insurance rose 47,000 after a little revised 78,000 decline during the week prior. The figure provides some indication of workers' ability to find employment but here again difficulties of seasonal adjustment this time of year are great.

The continuing claims numbers lag the initial claims figures by one week.

The insured rate of unemployment held steady w/w at 2.0%.

Credit Derivatives, Macro Risks, and Systemic Risks from the Federal Reserve Bank of Atlanta can be found here.

Unemployment Insurance (000s)  01/26/08 01/19/07 Y/Y 2006  2005 2004
Initial Claims  375  306 18.3% 313 331 343
Continuing Claims -- 2,716 8.1% 2,459 2,662 2,924
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