Initial Claims for the week of July 16 jumped 10k to 418k. The 4 week moving average (used to get a picture of the overall trend) dropped by 2.75k to 421.25k. Looking deeper in just 2011, the 4 wk average topped out at 440.25k the week of May 14, and has not dropped below 400k since the week of April 16 (399.25k). The rate of change on the 4wk avg has begun to turn negative while we’re seeing a divergence – initial claims have broken the negative rate of change (slowing) and gone positive in the most recent week.
Continuing claims (i.e. those receiving benefits) dropped 50k for week ending 7/9 to 3.698M while the 4 week average fell 4k to 3.72M. In continuing claims, the 4wk avg rate of change has been largely declining in 2011 with the exception of the weeks 4/23-5/14 and 6/25-7/2.
State Level Initial Claims
For the period ending Jul 2, for the states that we’re following in depth, initial claims were higher with the exception of Wisconsin.
Things To Watch
Minnesota IC and Continuing claims will definitely remain elevated as the full effects of the government shutdown there continues to finally manifest itself in the data. Overall Initial claims will spike once Borders and Cisco begin implementing their closings/layoffs which I believe is going to set the seeds for a not so good looking NFP number come August and September. Anecdotally I am hearing that in the Chicago collar counties, manufacturing is picking up slightly which should bode well for those people but I think there’s significant headwinds with respect to jobs and layoffs that could impact people’s perceptions (and therefore their spending/hiring habits).
Keep in mind that there’s still much structural selectiveness going on out there with it comes to hiring people which may not manifest itself in most of the official labor statistics, but will definitely have an impact on those who are newly unemployed.