First-time claims for unemployment insurance for the week ending May 4 dropped 4,000 to 323,000-- once again, the lowest level in more than five years, the ""Labor Department"":http://www.ows.doleta.gov/press/2013/050913.asp reported Thursday. Economists expected initial claims to increase to 335,000. First-time jobless claims for the week ending April 27 were revised up to 327,000 from the originally reported 324,000.[IMAGE]
The number of filings was the lowest since the week ending January 19, 2008.
The number of persons continuing to collect unemployment insurance for the week ending April 27, reported on a one week lag, fell 27,000 to 3,005,000. Continuing claims for the week ending April 20 were revised up to 3,032,000 from the originally reported 3,019,000.
The four-week moving average of initial claims fell 6,250 to 336,750--also the lowest level since January 2008. The four-week moving average of continuing claims fell 24,500 to 3,034,250.
The week-over-week decline in unemployment claims was the third in a row and the fourth in the last five weeks following three straight weekly increases, tracking favorable seasonal adjustment factors which are designed to account for recurring and predictable events which affect claims.
After bouncing up and down, initial claims appear to have found a new, lower plateau, which would be consistent with an improving labor market. Economists generally believe that initial claims below 350,000 each week signal an increase in payrolls--or at least that layoffs are not a drag on payrolls. According to the Bureau of Labor Statistics' (BLS) recent Job Openings and Labor Turnover Survey, hiring dropped in March, when payroll growth was initially reported at a disappointing 88,000 (later revised up to 138,000). In March, initial claims for unemployment insurance averaged 352,400.
Initial claims fell in seven of the first 10 weeks of the year but then increased in four of the next five before beginning another descent.
The Labor Department also said states reported 1,763,177 persons claiming EUC (Emergency Unemployment Compensation) benefits for the week ending April 20, a decrease of 14,560 from the prior week. There were 2,688,157 persons claiming EUC in the comparable week in 2012. EUC benefits are threatened by the federal budget sequester.
The total number of people claiming benefits in all programs for the week ending April 20 was 4,874,526, a decrease of 89,292 from the previous week, the Labor Department also said. There were 6,423,153 persons claiming benefits in all programs in the comparable week in 2012. Extended benefits were available only in Alaska during the week ending April 20.
According to BLS, 11,659,000 persons were officially considered unemployed in April, with 4.35 million ""long-term"" unemployed (that is, out of work for at least 27 weeks). Of those individuals counted as unemployed, 6.78 million were not receiving any form of government unemployment insurance for the week ending April 20, unchanged from one week earlier.
Federally funded benefits paid to the long-term unemployed were lowered by 10.7 percent starting March 31 as part of reductions to planned government spending. Benefit cuts will affect about 1.8 million workers, based on Labor Department data, and add to the drag on consumer spending from a payroll tax increase that took effect in January.
The reductions will cut about $2.4 billion from the unemployment trust fund this fiscal year, according to an Office of Management and Budget report. While that's not enough to have a measurable impact on $11 trillion in annual consumer spending nationwide, the effect will be magnified in places with large numbers of long-term unemployed and in states with generous programs, such as Hawaii.
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 May 7, 24 states had borrowed a total of $23.5 billion. One week earlier, 24 states had an aggregate $28.6 billion in outstanding loans to cover shortfalls. Five states--California, Indiana, New York, North Carolina and Ohio--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 27 were in Illinois (+1,744), Oregon (+1,244), New Hampshire (+765), Arkansas (+455), and Maine (+379), while the largest decreases were in California (-3,721), Michigan (-2,993), Wisconsin (-2,623), Massachusetts (-2,487), and Florida (-2,062).
_Hear Mark Lieberman Friday on P.O.T.U.S. radio, Sirius-XM 124, at 6:20 a.m. Eastern._