First-time claims for unemployment insurance fell back to 346,000 for the holiday-shortened week ending June 1, dropping 11,000 after increasing 13,000 one week earlier, the ""Labor Department"":http://www.ows.doleta.gov/press/2013/060613.asp reported Thursday. Economists expected initial claims to drop to 345,000. Claims filings for the week ended May 25 were revised up to 357,000 from the originally reported 354,000.[IMAGE]
The number of persons continuing to collect unemployment insurance for the week ended May 25, reported on a one week lag also declined, falling 52,000 to 2,952,000. The prior week's original report of 2,986,000 original claims though was revised up to 3,004,000.
The four-week moving average of initial claims rose for the fourth straight week, up 4,500 to 352,500--the highest level since mid-April. The four-week moving average of continuing claims fell 15,250 to 2,975,750, the lowest level since May 2008. Continuing claims have been falling in part due to the ongoing federal budget sequester.
Responding to sequestration cuts, some states have reduced the number of weeks out-of-work individuals can receive benefits while others have lowered payments. The sequestration cuts reduced unemployment programs at the end of March; the four-week moving average of continuing claims has fallen for seven straight weeks beginning in mid-April.
As a result of the sequester impact, comparative and trend data for continuing claims are becoming increasingly less reliable with improvement in that data series as likely to come from increased hiring as changes in the unemployment insurance programs.
Initial claims for the week ended June 1 were affected in part by low seasonal adjustment factors, which inflate the raw data. The adjustment factors will increase for the week ended June 8, which could mean an increase in claims. Filings for the week ended June 1 were also affected by the Memorial Day holiday for which most state offices were closed. Even though filings can be made electronically when offices are closed, state workers must still process them, squeezing five days of work into four.
This week's data on initial claims will have no impact on the Employment Situation report for May to be released by the Bureau of Labor Statistics tomorrow. That report is based on employment and payrolls for the calendar week, including the 12th day of the month.[COLUMN_BREAK]
From mid-April to mid-May, first-time claims dropped 11,000 and the four-week moving average fell 21,500, suggesting layoffs will not be a drag on payroll numbers for May.
Economists expect the BLS report to show an increase of 167,000 payroll jobs in May compared with an increase of 165,000 in April, with the unemployment rate unchanged at 7.5 percent. The forecast also sees average weekly hours climbing back up to 34.5 from 34.4, which could be a drag on job creation. Payroll processing firm ADP reported a 135,000 increase in private sector jobs in May compared with 113,000 in April. The May results fell short of expectations of 171,000 new jobs.
The Labor Department said the total number of people claiming benefits in all programs for the week ending May 18 was 4,646,761, an increase of 68,169 from the previous week. There were 5,970,572 persons claiming benefits in all programs in the comparable week in 2012. Extended benefits were not available in any state during the week ending May 18.
According to the 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, 7.01 million were not receiving any form of government unemployment insurance for the week ended May 18, down from 7.08 million one week earlier.
The Labor Department also said states reported 1,760,593 persons claiming EUC (Emergency Unemployment Compensation) benefits for the week ending May 18, an increase of 33,934 from the prior week. EUC benefits this year are threatened by the federal budget sequester.
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 June 4, 22 states had borrowed a total of $21.1 billion. One week earlier, 22 states had an aggregate $21.2 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 May 25 were in California (+8,622), Missouri (+2,999), Kentucky (+1,750), Pennsylvania (+1,333), and Kansas (+1,325), while the largest decreases were in Michigan (-2,185), North Carolina (-1,747), South Carolina (-867), Tennessee (-686), and Texas (-608).
_Hear Mark Lieberman Friday on P.O.T.U.S. radio, Sirius-XM 124, at 8:45 a.m. and again at 12:20 p.m. Eastern._