State & Pandemic Assistance Unemployment Insurance Claims Increase Unexpectedly

• State initial jobless claims rise for the first time since March, as job reopenings are rolled back.

• New filings for Federal Pandemic Unemployment Assistance rise.

• Continuing claims for state programs slip.

• The insured unemployment rate declines.

State initial jobless claims for unemployment insurance increased to 1.416 million during the week ended July 18 from 1.307 million in the prior week, revised from 1.300 million. The Action Economics Forecast Survey anticipated 1.285 million claims. The four-week moving average of initial claims eased to 1.360 million, the lowest level since April.

The latest figure covers the survey week for July nonfarm payrolls and claims were 8.1% below the June period. During the last ten years there has been a 70% correlation between the level of initial claims and the m/m change in payroll employment.

Initial claims for the federal Pandemic Unemployment Assistance (PUA) program, which covers individuals such as the self-employed who are not qualified for regular/state unemployment insurance, increased to 974,999 in the week ended July 18 from 955,272 in the prior week, revised from 928,488. PUA claims peaked at 1.348 million in the week ending May 23. Data for this and other federal programs are not seasonally adjusted.

Continuing claims for unemployment insurance declined to 16.197 million in the week ended July 11 from 17.304 million in the prior week, revised from 17.338 million. Continuing PUA claims, which are lagged an additional week, fell to 1.318 million from 1.428 million, revised from 14.283 million. Pandemic Emergency Unemployment Compensation claims increased to 940,113 in the week ending July 3. This program covers people who were unemployed before COVID but exhausted their state benefits and are not eligible to receive an additional 13 weeks of unemployment insurance, up to a total of 39 weeks.

The state insured rate of unemployment, which does not include federal programs, declined to 11.1% and remained below a mid-May peak of 17.1%. Individual state rates varied greatly. South Dakota at 4.5% was down from a May peak of 6.03%. Nevada was highest at 21.3%, down from a June peak of 26.75%. New York stood at 16.1%, below last month's peak of 19.92%, California at 16.9% was down from 20.57% and New Jersey stood at 12.2% versus 17.8% early in May. The insured unemployment rate in Michigan of 14.1% compared to a late-April peak of 23.14% and Ohio, at 8.1%, was down from 14.54% in mid-April. The state rates are not seasonally adjusted.

Data on weekly unemployment claims going back to 1967 are contained in Haver's WEEKLY database, and they are summarized monthly in USECON. Data for individual states are in REGIONW. The expectations figure is from the Action Economics Forecast Survey, carried in the AS1REPNA database.

• Component gains again are broad-based.

• Coincident indicators improve as well.

• Lagging indicators continue to indicate less economic stress.

The Conference Board reported that its Composite Index of Leading Economic Indicators increased 2.0% during June (-8.6% y/y) following a 3.2% May rise, revised from 2.8%. A 2.1% gain had been expected in the Action Economics Forecast Survey. The series is comprised of 10 components which tend to precede changes in overall economic activity.

Last month's gain in the leading index again reflected widespread improvement amongst the component series. Seven of the ten components rose, as they did in May. The largest positive contributions came from fewer initial unemployment insurance claims which accounted for 1.4 percentage points of the total's increase. A longer factory sector workweek added 0.4 point. Higher stock prices added 0.2 percentage point to the gain. More building permits added 0.1 point to the total's rise as did the interest rate spread between 10-year Treasury notes and Fed funds. These gains were offset by minimal declines in other component  series, including consumer expectations for business/economic conditions, consumer goods orders and the leading credit index.

Three-month growth in the leading index of -5.3% (AR) in June compared to a record decline of 44.0% in April.

The Index of Coincident Economic Indicators increased 2.5% in June (-9.1% y/y) following a 1.6% May rise, revised from 1.1%. A gain in payroll employment added 1.9  percentage points to the index rise. Industrial production also rose and added 0.8 percentage points. Personal income less transfer payments added minimally to the total's increase, and manufacturing & trade sales fell.

Three-month growth in the coincident index of -28.6% (AR) ending in June followed two straight months of decline over 40%.

The Index of Lagging Economic Indicators fell 2.5% (+2.7% y/y) in June after declining 1.2% in May, revised from -1.9%. Contributing negatively to the index change was the average duration of unemployment which subtracted 1.7 percentage points. Commercial & industrial loans outstanding subtracted 0.6 percentage points while the consumer installment credit/personal income ratio sapped 0.5 percentage point. The business inventory/sales ratio added slightly to the index change as did six-month growth in the services CPI.

Three-month growth in the lagging index in June dropped to -2.5% (AR) from 18.0% in May.

The ratio of coincident-to-lagging economic indicators is considered another leading indicator of economic activity. It rose sharply for a second month from its near-record low.

The Conference Board figures are available in Haver's BCI database; the components are available there, and most are also in USECON. The expectations are in the AS1REPNA database. Visit the Conference Board's site for coverage of leading indicator series from around the world.