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Economy in Brief

U.S. Initial Claims for Unemployment Insurance Surged
by Tom Moeller July 3, 2008

Initial claims for unemployment insurance last week surged to 404,000 versus an upwardly revised 388,000 during the prior week. Consensus expectations had been for 385,000 claims.

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 again rose to 390,500 (22.5% y/y). Claims averaged 369,000 during May. The numbers compare to March when initial claims averaged 375,000.

Continuing claims for unemployment insurance reversed some of the prior week's jump with a 19,000 worker decline. The four-week average of continuing claims rose to a new cycle high of 3,110,750.

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 slipped to 2.3%.

Unemployment Insurance (000s)  06/28/08 06/21/08 Y/Y 2007 2006  2005
Initial Claims  404 388 25.5% 322 313 331
Continuing Claims -- 3,116 21.9% 2,552 2,459 2,662
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