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Economy in Brief

U.S. Initial Claims for Jobless Insurance Rise Into Recession Zone?
by Tom Moeller April 3, 2008

Initial unemployment insurance claims surged 38,000 last week to 407,000. A dip of 6,000 during the prior week was revised slightly from the 9,000 worker decline reported initially. The latest was near the highest level since September 2005. Consensus expectations had been for 365,000 initial claims last week.

The Labor Department indicated that the early Easter Holiday, and the associated difficulty of seasonally adjusting the data, may have boosted the figure. If so unemployment claims would fall sharply this week. Also, a strike at the American Axel company may be contributing to the rise in claims.

Last week's level was the highest since September 2005. At that time payroll employment, as reported by the Bureau of Labor Statistics, was still growing by at least 100,000 per month.

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.

The four week moving average of initial claims rose to 374,500 (20.1% y/y).

Continuing claims for unemployment insurance surged by 97,000 after a revised 25,000 worker decline during the prior week. Insured unemployment was at its highest level since mid 2004. The figure provides some indication of workers' ability to find employment.

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

The insured rate of unemployment rose slightly to 2.2%.

Unemployment Insurance (000s)  03/28/08 03/21/08 Y/Y 2007 2006  2005
Initial Claims  407 369 27.6% 322 313 331
Continuing Claims -- 2,937 18.0% 2,552 2,459 2,662
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