Initial, Continuing Unemployment Claims Drop Sharply

First-time claims for unemployment insurance fell 22,000 to 344,000 for the week ending February 23, the ""Labor Department"":http://www.ows.doleta.gov/press/2013/022813.asp reported Thursday.

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Economists expected 360,000 initial unemployment claims. The drop in filings--the third in the last four weeks--resumed a downward trend in layoffs. The report on claims for the week ending February 16 was revised to 366,000 from the originally reported 362,000.

Meanwhile, the number of continuing claims fell to the lowest level in almost five years.

The four-week moving average of first time claims fell 6,750 to 355,000. The moving average, which smooths the volatility in the weekly report, has fallen in nine of the last 13 weeks.

Continuing claims--reported on a one-week lag--fell 91,000 to 3,074,000 to the lowest level since June 2008. The prior week's report of continuing claims was revised upward to 3,165,000 for the original report of 3,148,000.

The four-week moving average of continuing claims fell 35,500 to 3,155,000, the lowest level since July 2008. The continuing claims data series tracks the number of longer term unemployed who qualify for regular state jobless benefits and often shows large movements, depending on first time claims 26 weeks earlier and legislative changes to state unemployment programs. It is subject to wider revisions than the number of first time claimants.

This week's report on initial claims also included the revised numbers for the week used by the Bureau of Labor Statistics (BLS) for the monthly employment situation report which will be released March 8. From mid-February to mid-March, first-time claims for unemployment insurance increased 31,000 and the four-week average of initial claims rose by 1,750. Those increases will be a drag on the employment and jobs numbers, adding another hurdle for new hiring to overcome.

Claims reports in the first two months of any year are highly volatile, with seasonal adjustments moving in a wide range to attempt to normalize for layoffs, which typically occur in industries which staff up at year-end. In addition, reports are affected by holidays, which delay processing of claims filed electronically.

Initial claims fell in three of the first seven weeks of 2012, dropping an average of 15,000. In the four weeks in which claims rose, the average increase was a little over 8,000. This year, claims have fallen in four of the first seven weeks with an average drop of 18,500, but the average increase in the other three weeks was 23,000, suggesting employers may have done even more short term hiring for the holiday season.

The total number of people claiming benefits in all programs for the week ending February 9 was 5,764,168, an increase of 183,841 from the previous week. There were 7,498,600 persons claiming benefits in all programs in the comparable week in 2012.

According to BLS, 12,332,000 persons were officially considered unemployed in January, which means that of those individuals counted as unemployed, 6.57 million were not receiving any form of government unemployment insurance, up from 6.72 million one week earlier.

The Labor Department said states reported 2,005,991 persons claiming EUC (Emergency Unemployment Compensation) benefits for the week ending February 9, an increase of 186,935 from the prior week. There were 2,904,562 persons claiming EUC in the comparable week in 2012.

States continue to borrow from the federal government to cover shortfalls in those funds, which will eventually have to be repaid (unless Congress intervenes) with higher assessments on employers. Since those assessments are a percentage of payrolls, they discourage employers from adding new workers. As of February 15, 23 states had borrowed a total of $28.3 billion. One week earlier, 23 states had an aggregate $28.1 billion in outstanding loans to cover shortfalls.

Five states--California, Indiana, New York, North Carolina and Ohio--owe more than $1 billion, which may require higher unemployment premiums or special assessments on employers in those states.

According to the Labor Department detail, also reported on a one-week lag, the largest increases in initial claims for the week ending February 16 were in California (+26,683), Connecticut (+1,747), Massachusetts (+883), and New Mexico (+5), while the largest decreases were in Illinois (-3,285), Kansas (-3,114), Pennsylvania (-2,865), Florida (-2,442), and Ohio (-2,265).

_Hear Mark Lieberman Friday on P.O.T.U.S. radio, Sirius-XM 124, at 6:40 a.m. and again at 9:40 a.m. EST._