First-Time Jobless Claims Drop to Pre-Sandy Levels

Continuing to show the recovery from superstorm Sandy, first-time claims for unemployment insurance fell 25,000 to 370,000 for the week ending December 1, the ""Labor Department"":http://www.ows.doleta.gov/press/2012/120612.asp reported Thursday. Economists expected 380,000 initial claims filings.

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The previous week's report was revised upward to 395,000 from the originally reported 393,000.

Continuing claims--reported on a one-week lag--fell 100,000 to 3,205,000. The previous week's initial report of 3,287,000 continuing claims was revised upward to 3,305,000. The continuing claims report tracks the number of longer term unemployed who qualify for regular state jobless benefits.

The-report marks the return to pre-storm levels of initial claims. In the four weeks prior to the storm, first time unemployment claims averaged 372,000. The recovery tracks the movement in claims following Hurricanes Katrina and Rita in 2005. In the four weeks prior to those storms, initial claims averaged 319,500. About five weeks after Rita struck, the four-week average was 320,000.

The drop in claims should mute the impact of the storm on mortgage delinquencies.

With this week's report, the four-week moving average of initial claims remained elevated at 408,000, up from 405,750 one week earlier, but this four-week average includes the dramatic spike in claims in the week following Sandy. That unusually large number will drop out of the four-week average next week. The four-week moving average of continuing claims rose 7,750 to 3,309,000.

This report will have no statistical impact on the monthly Employment Situation report to be released Friday. That report is based on the job and employment data for the week including the 12th calendar day of the month. Economists are expecting that report to show the unemployment rate inched back up to 8.0 percent with 70,000 new jobs created.

Sandy struck at the end of October, the deadline for submitting voluntary payroll reports to the Bureau of Labor Statistics (BLS) that are used to develop the overall jobs report. In October, 72.0 percent of firms reported payroll data to the BLS, down from 77.0 percent in September.

While Sandy's impact on the unemployment rate could be muted, it might show up in the jobs count, a separate survey conducted by BLS. The BLS report for November will include survey data received by Monday December 3. An individual who was paid for any part of the week including November 12 is counted as a job but businesses shuttered by the storm may be too consumed by repairs to submit a voluntary response to the jobs survey.

The total number of people claiming benefits in all programs for the week ending November 17 was 4,959,240, a decrease of 224,722 from the previous week. There were 6,575,150 persons claiming benefits in all programs in the comparable week in 2011. Extended Benefits were only available in New York during the week ending November 17.

According to the BLS, unemployment was 12,258,000 in October which means that of those individuals counted as unemployed, 7.08 million were not receiving any form of government unemployment insurance, up from 7.02 million one week earlier.

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 December 3, 20 states have an aggregate $26.2 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.

The Labor Department said states reported 2,008,608 persons claiming EUC (Emergency Unemployment Compensation) benefits for the week ending November 17, a decrease of 110,446 from the prior week. There were 2,794,284 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 November 24 were in Wisconsin (+5,876), Oregon (+2,328), Ohio (+2,252), Washington (+2,107), and Iowa (+1,262), while the largest decreases were in New Jersey (-23,966), California (-7,053), New York (-6,682), Texas (-6,425) and North Carolina (-2,609).