First-Time Unemployment Claims Lower than Expected

Shaking off the effects of Hurricane Isaac, first-time claims for unemployment insurance fell 26,000 to 359,000 for the week ended September 22, according to findings from the ""Labor Department"":http://www.dol.gov/opa/media/press/eta/ui/current.htm. Falling far below market expectations, the report followed revisions to the previous week's survey, which was adjusted upward to 385,000 first-time claims off of the originally reported 382,000. Economists had predicted a smaller figure for first-time claims, anticipating around 376,000.

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Continuing claims ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô reported on a one-week lag ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô dropped 4,000 to 3,271,000 from the prior week's total of 3,275,000, which was revised from the originally reported 3,272,000.

The surprising report will have no impact on the monthly employment situation survey for September, which is to be issued by the Bureau of Labor Statistics October 5. The report ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô tracking the nation's unemployment rate and job creation ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô is compiled based on payroll and household findings for the week of the month that includes the twelfth calendar day. Indeed, with the upward revision, first-time unemployment claims rose 14,000 from mid-August to mid-September.

The current report was affected by a low seasonal adjustment factor, and the Labor Department's experience has been that claims in September are generally more heavily influenced by seasonal factors such as individuals leaving part-time summer jobs, and therefore need to be adjusted to remain comparable with other weeks.

The first-time claims tally was the lowest in 11 weeks For initial-claim filings, which had dipped as low as 352,000 for the week ended July 7 (also a holiday-shortened week) have risen

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steadily until this week's report, averaging 373,000, due to the late August hurricane.

The upward adjustment to the prior week's report was the thirty-third time this year that the preliminary data was revised higher.

The four-week moving average of first-time claims decreased 4,500 to 374,000, breaking a string of five consecutive weekly increases.

The four-week moving average of continuing claims fell 15,000 to 3,295,500. Continuing claims generally reflect the ability of the long-term unemployed to find work, and are thus considered an indicator of payroll jobs. However, the figures can also be affected by legislative action to reduce the duration of unemployment benefits at state levels; many states have reduced benefit periods for budgetary reasons.

The total number of people claiming benefits in all programs - reported on two-week lag - for the week ending September 8 was essentially flat at 5,173,586, down 11,000 from the previous week.

States have been borrowing 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 September 24, states have an aggregate $26.1 billion in outstanding loans to cover shortfalls, up from $25.9 billion one week earlier. In the absence of Congressional action, interest on those loans could lead to states increasing contribution rates by employers.

States reported 2,160,448 persons claiming Emergency Unemployment Compensation (EUC) benefits for the week ending September 8, a decrease of 2,084 from the prior week. There were 3,036,635 persons claiming EUC in the comparable week in 2011.

According to the Labor Department detail, also reported on a one-week lag, the largest increases in initial claims for the week ending September 15 were in California (+18,522), Michigan (+3,522), Florida (+2,018), New York (+1,969), and Indiana (+1,739). Meanwhile, the largest decreases were seen in Louisiana (-4,150), Puerto Rico (-854), Missouri (-811), Kentucky (-710), and Mississippi (-518).