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Initial Jobless Claims Drop, Continuing Claims at 5-Year Low

First-time claims for unemployment insurance dropped for only the second time in the last six weeks, falling 16,000 to 339,000 for the week ending April 20, the ""Labor Department"":http://www.ows.doleta.gov/press/2013/042513.asp reported Thursday. Economists expected 350,000 initial claims. Initial jobless claims for the week ending April 13 were revised up to 355,000 from the originally reported 355,000.

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The 339,000 first-time claims was the lowest level since early March.

The number of persons continuing to collect unemployment insurance for the week ending April 13 (reported on a one week lag) fell 93,000 to 3,000,000, the lowest level since May 2008. Continuing claims for the week ending April 6 were revised up to 3,093,000 from the originally reported 3,068,000.

The four-week moving average of initial claims fell for the first time since mid-March, dropping 4,500 to 357,500. The four-week moving average of continuing claims fell 17,500 to 3,071,750.

The report offered final numbers for the week ending April 13, the same week used by the Bureau of Labor Statistics (BLS) for its monthly Employment Situation report to be released May 3. From mid-March to mid-April, the moving average of first-time unemployment claims increased 14,000, and the four week moving average rose 21,000, suggesting layoffs will be a drag on net new payroll jobs for April. For March, BLS reported the economy added a disappointing 88,000 payroll jobs.

The increase in claims could also send the unemployment rate up from the 51-month low 7.6 percent recorded for March.

The continuing claims data series is often the more significant series in forecasting the unemployment rate and payroll totals. Essentially, there are only three ways to stop collecting unemployment insurance: if the individual gets a job, if benefits expire, or if the individual is no longer available to collect. From mid-March to mid- [COLUMN_BREAK]

April, the continuing claim data increased 4,000, another indicator of a less-than-robust payroll report next week.

The continuing claims series tracks the number of individuals who have been receiving unemployment benefits for two or more weeks 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. Initial claims jumped 50,000 in the report 26 weeks ago, which makes the drop in continuing claims significant.

The total number of people claiming benefits in all programs for the week ending April 6, the Labor Department said, was 5,071,050, a decrease of 81,605 from the previous week. There were 6,683,265 persons claiming benefits in all programs in the comparable week in 2012. Extended Benefits were available only in Alaska during the week ending April 6.

According to BLS, 11,742,000 persons were officially considered unemployed in February, which means that of those individuals counted as unemployed, 6.59 million were not receiving any form of government unemployment insurance, up from 6.46 million one week earlier.

The Labor Department reported 1,790,316 persons claiming EUC (Emergency Unemployment Compensation) benefits for the week ending April 6, an increase of 7,761 from the prior week. There were 2,729,204 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 April 22, 23 states had borrowed a total of $29.9 billion. One week earlier, 23 states had an aggregate $29.7 billion in outstanding loans to cover shortfalls. Seven states--California, Indiana, New Jersey, New York, North Carolina, Ohio and Wisconsin--each 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 April 13 were in California (+24,303), Texas (+3,050), Florida (+2,623), Indiana (+2,372), and Arizona (+1,296), while the largest decreases were in New York (-14,113), Michigan (-5,998), New Jersey (-4,204), Ohio (-3,036), and Illinois (-2,455).

_Hear Mark Lieberman Friday on P.O.T.U.S. radio, Sirius-XM 124, at 6:20 a.m. Eastern time._

About Author: Mark Lieberman

Mark Lieberman is the former Senior Economist at Fox Business Network. He is now Managing Director and Senior Economist at Economics Analytics Research. He can be heard each Friday on The Morning Briefing on POTUS on Sirius-XM Radio 124.
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