August 7, 2014

Initial Unemployment Claims (080714): 289K SA (8-1/2 Year Low); Raw Claims Below 250K

Filed under: Economy,Taxes & Government — Tom @ 8:09 am

Predictions:

Seasonal adjustment factors:

  • Week ended August 2, 2014 — 85.6
  • Week ended August 3, 2013 — 86.1

Raw claims:

  • Week ended July 26, 2014 — 257,210
  • Week ended August 3, 2013 — 288,861

To meet or beat Bloomberg’s lower prediction, raw claims will need to be 260,000 or lower (260K divided by .856 is 304K, rounded).

We’ll see what happens here at 8:30.

HERE IT IS (permanent link):

SEASONALLY ADJUSTED DATA

In the week ending August 2, the advance figure for seasonally adjusted initial claims was 289,000, a decrease of 14,000 from the previous week’s revised level. The previous week’s level was revised up by 1,000 from 302,000 to 303,000. The 4-week moving average was 293,500, a decrease of 4,000 from the previous week’s revised average. This is the lowest level for this average since February 25, 2006 when it was 290,750. The previous week’s average was revised up by 250 from 297,250 to 297,500.

UNADJUSTED DATA

The advance number of actual initial claims under state programs, unadjusted, totaled 247,133 in the week ending August 2, a decrease of 10,492 (or -4.1 percent) from the previous week. The seasonal factors had expected an increase of 1,514 (or 0.6 percent) from the previous week. There were 288,861 initial claims in the comparable week in 2013.

Those are undeniably strong results, perhaps influenced by the auto industry’s move away from long summer shutdowns which the seasonal factors aren’t picking up, but undeniably strong nonetheless.

So we’re left to wonder how we can have 6.2 percent unemployment (and millions on the sidelines) with a quarter-million unemployment claims per week, compared to a much lower 4.8 percent unemployment rate the last time seasonally adjusted claims were so low in 2006.

The guess here is tha much of it has to do the more part-time and temporary nature of the workforce.

The FT/PT breakdown in the U.S. labor force in February 2006 was 118.7 million/24.7 million, with 2.63 million temporary employees.

The FT/PT breakdown in July 2014 was 118.5 million/28.1 million, with 2.88 million temps. That’s 200K fewer FT, 3.4 million more PT, and 250K more temps than 8-1/2 years earlier.

People who collect unemployment benefits are overwhelmingly full-timers who aren’t temps.

Thus, the number of people who would be motivated to file for and collect unemployment benefits if laid off or terminated is probably smaller than it was in 2006. The theory here is that people who work a part-time job with low pay may be eligible for benefits, but if they’re let go, they’re more apt to quickly find other part-time work and not to bother filing an unemployment claim. Some may also determine that their calculated benefit isn’t worth the paperwork hassle, especially if they already have another part-time job — a far from unusual circumstance these days.

In other words, though the claims numbers are pleasantly low, they’re not automatically cause for “Eureka! We’ve arrived” celebrations.

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