U.S. Weekly Claims For JoblessInsurance Inch Lower While Continuing Claims Tick Higher

Improvement in the U.S. labor market still is evident, but lately it's been a halting trend. The latest figures from the Labor Department indicate that initial claims for unemployment insurance fell last week to 550,000 and more than reversed the prior week's unrevised increase. For all of July, claims fell 9.4% from June, but since the beginning of the month they moved sideways. The four-week moving average of claims, which smoothes out some of the volatility in the weekly numbers, slipped to 555,250 which was its lowest level since late-January. A rise in weekly claims to 580,000 had been expected.

The Bureau of Labor Statistics will release the report on July nonfarm payrolls tomorrow. During the last ten years, there has been an 86% correlation between the level of initial unemployment insurance claims and the m/m change in payroll employment.

The Labor Department indicated that the largest increases in initial claims for the week ending July 25 were in Ohio (+891, +3.6% y/y), Oklahoma (+644, +121% y/y), Mississippi (+222, -5.2% y/y), Louisiana (+154, +33.7% y/y), and Alaska (+129, +51.9% y/y), while the largest decreases were in North Carolina (-9,809, +17.7% y/y), Michigan (-9,085, +20.9% y/y), Florida (-8,714, +11.9% y/y), Georgia (-6,948, +61.5% y/y), and Alabama (-3,822, +31.8% y/y).

A sideways movement in continuing claims for unemployment insurance also became apparent last month. For the latest week, they rose a modest 69,000 and that was enough to reverse the declines during the prior two weeks. Continuing claims provide an indication of workers' ability to find employment and the level of 6,310,000 claims is up sharply from the year-ago level. The four-week average of continuing claims fell back to 6,378,750 and that was the lowest since late-April. The series dates back to 1966.

The insured rate of unemployment remained at 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 July 18 were in Puerto Rico (8.0 percent), Michigan (6.7), Oregon (6.5), Pennsylvania (6.5), Nevada (6.1), Wisconsin (5.7), Connecticut (5.5), New Jersey (5.5), California (5.4), Rhode Island (5.3), and South Carolina (5.3). The lowest rates were in South Dakota (1.4) and North Dakota (1.5), Virginia (2.5), Wyoming (3.0), Texas (3.1), Maine (3.3), Colorado (3.3), Maryland (3.7), Minnesota (3.8), Florida (4.3), Mississippi (4.3), New York (4.4) and Georgia (4.4).

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

German new orders rose by 4.5% in June after rising by 4.4% in May. Orders are up and at a 42% annual rate over three-months and STILL they stand lower by 23.7% than they did one year ago. In the newly completed second quarter, orders are up at a 26.8% annual rate. While real sector sales in mining and MFG are up at a 3.4% pace in the quarter. Germany is beginning to turn the corner, despite ongoing weakness in retail sales.

German domestic orders barely nudged higher rising by nearly rounding error (0.2%) in June. Foreign orders spurted by 8.3% putting in their second strong month in a row. Exports remain the lifeblood of the German economy. The report that Hungary’s industrial output rose for the second month in a row is good news for Germany, suggesting that eastern European export markets are among those that are reviving.

In June German real sector sales for consumer goods rose by 0.2% as consumer durables plunged by 3.7%. Capital goods real sales rose by 1.2% after spurting by 9.2% in May. Intermediates goods sales rose by 2.8%. German real sector sales were up across the abroad in the quarter as well with the exception of consumer durables, where sales fell in the quarter at a hefty -8.4% annual rate.