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Economy in Brief

U.S. Initial Claims For Unemployment Insurance Surged Further
by Tom Moeller September 25, 2008

Initial claims for unemployment insurance jumped again last week. The level of 493,000 compared to an upwardly revised 461,000 during the week prior. The latest was the highest level since during the recession of 2001.

The four-week moving average also jumped to the highest level since the last recession and stood at 462,500 (45.7% y/y). During August initial claims averaged 443,000.

A claims level below 400,000 typically has been associated with positive 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 rose 63,000 and reversed a 53,000 decline during the prior period. The four-week average of claims rose to 3,489,250. That was the highest level since July 2003. 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 held stable for the third week at 2.6%, the highest level since late-2003.

Unemployment Insurance (000s)  09/20/08 09/13/08 Y/Y 2007 2006  2005
Initial Claims  493 461 59.5% 322 313 331
Continuing Claims -- 3,542 38.4% 2,552 2,459 2,662
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