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Economy in Brief

U.S. Initial Unemployment Insurance Claims SlipĀ 
by Tom Moeller June 4, 2009

The labor market is neither worsening nor improving significantly. It just remains quite soft. The latest indication of this is last week's slip in initial claims for unemployment insurance by 4,000 to 621,000 from an upwardly revised level of 625,000. Initial claims are down from their March peak of 674,000. However, the four-week average of claims, which smoothes out some of the volatility in the weekly numbers, rose slightly to 631,250. Though that was near the lowest level since mid-February it was up by two-thirds from the year ago level. The Consensus expectation was for 620,000 claims last week.

The Labor Department indicated that the largest increases in initial claims for the week ending May 23 were in Illinois (+3,881), Iowa (+2,312), South Carolina (+1,792), Texas (+1,548), and Wisconsin (+1,464), while the largest decreases were in North Carolina (-3,952), Michigan (-2,812), Ohio (-2,158), Tennessee (-2,053), and Connecticut (-1,320).

Continuing claims for unemployment insurance, which provide an indication of workers' ability to find employment remained near the record high of 6,735,000, 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 6,687,500. The series dates back to 1966.

Another indication of the labor market's softness was that the insured unemployment rate held at 5.0% for the third 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 16 were in Michigan (7.6 percent), Oregon (7.1), Puerto Rico (6.7), Nevada (6.4), Pennsylvania (6.2), Wisconsin (5.9), California (5.5), Arkansas (5.4), Idaho (5.4), and North Carolina (5.4). Even in states where the insured unemployment rate was relatively low such as Massachusetts (5.0), New York (4.3), Florida (3.9) Georgia (3.7), Texas (2.9), and Virginia (2.6), the level was double that of one year ago.

The unemployment insurance claims data is available in Haver's WEEKLY database and the state data is in the REGIONW database.

Yesterday's testimony by Fed Chairman Ben S. Bernanke can be found here.

Unemployment Insurance (000s)  05/30/09 05/23/09 05/16/09 Y/Y 2008 2007 2006 
Initial Claims 621 625 636 67.8% 420 321 313
Continuing Claims -- 6,735 6,750 117.6% 3,342 2,552 2,459
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