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First-Time Unemployment Claims Inch Up, Stop Short of Expectations

First-time claims for unemployment insurance edged up by 4,000 to 367,000 for the week ended September 29, the ""Labor Department"":http://www.dol.gov/opa/media/press/eta/ui/current.htm reported Thursday. The previous week's report was revised upward to 363,000 first time claims from the originally reported 359,000.

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Economists had predicted a larger increase to 370,000 first-time claims.

Continuing claims├â┬ó├óÔÇÜ┬¼├óÔé¼┼ôreported on a one-week lag├â┬ó├óÔÇÜ┬¼├óÔé¼┼ôwere unchanged at 3,281,000. The previous week's report of 3,271,000 continuing claims was revised up to 3,281,000.

The report will have no impact on the monthly employment situation report for September to be issued by the Bureau of Labor Statistics Friday. That report├â┬ó├óÔÇÜ┬¼├óÔé¼┼ôtracking the nation's unemployment rate and job creation├â┬ó├óÔÇÜ┬¼├óÔé¼┼ôis compiled based on payroll and household surveys for the week of the month including the 12th calendar day. First-time unemployment claims rose 14,000 from mid-August to mid-September, suggesting another weak payroll report.

This week's report was again affected by a low seasonal adjustment factor. The Labor Department's experience has been that claims in September are generally affected by seasonal factor├â┬ó├óÔÇÜ┬¼├óÔé¼┼ôsuch as individuals leaving part-time summer jobs├â┬ó├óÔÇÜ┬¼├óÔé¼┼ôand therefore need to be adjusted to be comparable with other weeks.

Although initial claims appear to have plateaued (occasional weather-related spikes notwithstanding) first-time claims fell in only five weeks during the third quarter, with a wide range: As high as 388,000 in the week following the July 4 holiday week and 385,000 in each of the two weeks following Hurricane Isaac, but as low as 352,000 when the quarter began.

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Since the beginning of the quarter, claims have risen an average of 1,250 per week├â┬ó├óÔÇÜ┬¼├óÔé¼┼ôcertainly lower than during the depths of the recession, but a worrisome trend, nonetheless.

The upward adjustment to the prior week's report was the 34th time this year the preliminary data was revised higher.

The four week moving average of first-time claims was unchanged at 375,000. The four week moving average of continuing claims fell 12,750 to 3,285,250. Continuing claims generally reflect the ability of the long-term unemployed to find work and thus considered an indicator of payroll jobs, but could 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├â┬ó├óÔÇÜ┬¼├óÔé¼┼ôreported on two week lag├â┬ó├óÔÇÜ┬¼├óÔé¼┼ôfor the week ending September 15 fell to 5,088,612, a drop of 85,386, primarily in basic state programs├â┬ó├óÔÇÜ┬¼├óÔé¼┼ôrather than emergency and extended programs enacted by Congress.

States have been borrowing from the federal government to cover shortfalls in those funds which will eventually have to be repaid├â┬ó├óÔÇÜ┬¼├óÔé¼┼ôunless Congress intervenes├â┬ó├óÔÇÜ┬¼├óÔé¼┼ôwith higher assessments on employers. Since those assessments are a percentage of payrolls, they discourage employers from adding new workers.

As of October 2, 20 states have an aggregate $26.4 billion in outstanding loans to cover shortfalls, up from $26.1 billion one week earlier. Absent Congressional action, interest on those loans could lead to states increasing contribution rates required from employers.

States reported 2,143,049 persons claiming EUC (Emergency Unemployment Compensation) benefits for the week ending September 15, a decrease of 17,399 from the prior week, the Labor Department said. There were 3,027,447 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 22 were in Mississippi (+3,314), Ohio (+1,975), Michigan (+1,179), Alabama (+823), and Kentucky (+372), while the largest decreases were in California (-13,527), New York (-3,773), North Carolina (-2,198), Indiana (-2,160), and Virginia (-1,969).

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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