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Thursday, November 29, 2007

Unemployment - A Psychological Milestone

Today SA unemployment initial claims came in at 352,000. Because initial claims at 350,000 or above are considered to be a marker of degeneration in the employment marker, it might have a psychological effect on the markets. If the 4 week rolling average were to go over 350,000, most economists would concede that unemployment was approaching a recessionary level.

Actually what matters far more (to me) are continuing claims. The economy is always changing, and what matters far more than layoffs are how quickly laid off workers can find other employment. Continuing claims have been slowly rising this fall. Before they had been fixed in the 90,000 to 95,000 range above last year's, but they have broken out and are currently running well over that mark. The four week rolling average for continuing claims is now about 150,000 above last year's level. So although I don't see today's initial claims as significant in and of itself, it does look disappointing against that backdrop.

SA insured unemployment for 11/17 increased 112,000 from the week before, bringing the SA total to 2,665,000. Contrast that to last year's 2,464,000. NSA (actual) insured unemployment actually dropped, and is 2,222,940, contrasted to last year's 2,074,608.

Unemployment claims only monitor the universe of covered employment. Therefore they are very insensitive to changes in construction employment, which is largely handled by contractors that are paid by the job. We have certainly lost the equivalent of over 800,000 construction jobs this year, and probably well over a million.

If you go to this page and choose the weekly claims option, you can pull historical sequences of the unemployment claims, total universe of covered employment, and continuing claims. Initial claims are always choppy at this time of the year, and what is truly different this year are the continuing claims:
11/11/2006 286,151 90.7 315,000 2,269,427 93.5 2,427,000 1.7 1.9 130,605,286
11/18/2006 367,690 114.2 322,000 2,074,608 84.2 2,464,000 1.6 1.9 130,605,286
11/25/2006 323,509 92.8 349,000 2,620,460 105.5 2,484,000 2.0 1.9 130,605,286
12/02/2006 448,898 138.8 323,000 2,436,936 98.8 2,467,000 1.9 1.9 130,605,286

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