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Economy in Brief

Sharp Decline In U.S. Claims For Jobless Insurance Suggests Labor Market Improvement
by Tom Moeller July 16, 2009

Conditions in the labor market improved further last week as evidenced by a sharp decline in both initial and continuing claims for unemployment insurance. For the second consecutive week, the report on initial claims was surprising. A 47,000 drop to 522,000 which followed a similar decline during the prior week. The latest level was the lowest since the first week of January and it was off from the March peak of 674,000. The four-week average of claims, which smoothes out some of the volatility in the weekly numbers, also fell to 584,000. The latest weekly level was quite a bit lower than Consensus expectations for 554,000.

The Labor Department indicated that the largest decreases in initial claims for the week ending July 4 were in New Jersey (-5,030), California (-4,293), North Carolina (-3,983), Kansas (-3,544), and Oregon (-1,454) while the largest increases were in Michigan (+12,144), New York (+8,913), Wisconsin (+5,838), Indiana (+5,430), and Ohio (+4,240).

Confirming the labor market's improvement was a 642,000 drop in continuing claims for unemployment insurance to the lowest level since mid-April. The continuing claims figures lag initial claims by one week and provide an indication of workers' ability to find employment. At 6,273,000 claims still were nearly double the year ago level. The four-week average of continuing claims fell back to 6,666,750 which was the lowest since mid-May. The series dates back to 1966.

The insured rate of unemployment dropped sharply to 4.7% which was the lowest level since mid-April. 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.

The highest insured unemployment rates in the week ending June 27 were in Michigan (7.2 percent), Puerto Rico (6.9), Oregon (6.5), Pennsylvania (6.3), Nevada (6.1), Wisconsin (5.8), California (5.4), South Carolina (5.4), Connecticut (5.2), Illinois (5.2), New Jersey (5.2), and North Carolina (5.2). Rates were lowest in Texas (3.0), Wyoming (3.2), Colorado (3.2), Maine (3.4), Maryland (3.6), Minnesota (4.0), Florida (4.1), Georgia (4.2) and Mississippi (4.3).

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

The minutes to the latest FOMC meeting can be found here.

Unemployment Insurance (000s)  07/11/09 07/04/09 06/27/09 Y/Y 2008 2007 2006 
Initial Claims 522 569 617 34.9% 420 321 313
Continuing Claims -- 6,273 6,915 97.9% 3,342 2,552 2,459
Insured Unemployment Rate (%) 4.7 5.2 2.4 2.5 1.9 1.9
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