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--Barry Asmus

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Thursday, June 16, 2011

First Time Jobless Claims

Next on the agenda for market-moving news, we have unemployment insurance claims.
Last week, we had "mixed but bad" results.  The analysts had been calling for 418,000 new claims for 6/4, and we got 427,000 instead.  On the other hand, looking at the unadjusted numbers for the week, we had 364,507 claims (a decrease of 12,914).  The total number of people claiming benefits in all programs (for the week ending 5/21) fell to 7,601,344.  Which was nice, except for the fact that a little math worked out that only 2.69% of the 453,343 people who stopped claiming benefits in all programs actually got back to work.  That fact isn't nice at all.
But the Econoday-surveyed analysts, feeling optimistic, are calling for 420,000 initial claims for the week ending 6/11.  Are they right?  To find out, we turn now to - say it with me - the US Department of Labor's Unemployment Insurance Weekly Claims Report.  And, once there, we'll get the initial wave of euphoria from good news out of the way:  the 6/4 initial claims figures were adjusted upwards to 430,000, but the 6/11 seasonally adjusted initial claims figures come in at 414,000.  Yes, expectations have been beaten.
On the down side, the unadjusted number of new claims for 6/11 comes in at 394,910, an increase of 30,403.  That's not so good.  The total number of people claiming benefits in all programs for the week ending 5/28 comes in at 7,401,228, a decrease of 200,116.  But don't celebrate that figure yet:  I have math skills, and those math skills are about to rain on that parade.
The week ending 5/21 had 7,601,344 people claiming benefits in all programs.  The week ending 5/28 added 377,421 first time claimants to that number, but came in at a total of 7,401,228 total claimants in all programs at week end.  That means 7,601,344 + 377,421 - 7,401,228 = 577,537 people stopped claiming unemployment benefits in the week ending 5/28.
Now, we know from May's Employment Situation report that only 54,000 nonfarm jobs were created in May.  That works out to 1742 jobs per day, or 12,194 nonfarm jobs per week. In other words, only about 2.11% of the people that stopped claiming benefits in all programs did so because they got nonfarm work.  It is probably reasonable to assume that a far smaller percentage got farm work.  The rest?  Some probably went back to school, or became full-time homemakers, or something like that.  The majority, however, probably just ran out of benefits.
But, hey!  We beat expectations!

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