The U.S. Department of Labor Department jobless claims report shows that fewer people applied for unemployment benefits for the week ending June 2 2012 to 377,000. Bloomberg News 42 economists released a consensus figure of 378,000. Claims declined 12,000 from 389,000 (originally 383,000 revised figure) recorded the prior week. This report offers a sliver of positive news after the May 2012 jobs report revealed that companies hire the fewest number of workers in a year. In May, employers added 69,000 jobs compared to 77,000 in April.
Moving Average Up
The four-week moving average measured higher by 1,750 pushing jobless claims to 377,750. This is up from a month ago when the revised four-week moving average show 376,000. Economists usually followed the weekly moving average because it removes volatility from initial claims data and shows the general trend. The four-week moving average represents a simple average of the last four weeks of jobless claims data.
Although employers have not fired workers, many firms refuse to add on more jobs without stronger, sustained demand. Most of the demand has to come from the consumer side because consumers comprise 70 percent of the gross domestic product. Putting more people to work creates more disposable income for workers to spend on personal consumption.
The U.S unemployment rate moved above 8 percent in February 2009. This has been the longest period of the U.S. unemployment rate above the 8 percent mark since the Labor Department began keeping records in 1948, according to Bloomberg News.
The report also shows an increase of 34,000 in the number of individuals continuing to collect jobless benefits, which increases the total to 3.29 million people for the week ending May 26. This figure does not include workers who have exhausted conventional unemployment benefits and now receive extended payments or emergency workers’ benefits—down by 105,000 to 2.83 million for the week ending May 19.
These five states– Georgia (2,078), Tennessee (1,983), Missouri (1,898), Illinois (1,798) and New York (1,578) experienced an increase of 1,000 or more claims.
The total number of American receiving unemployment benefits from all programs, including state, federal and other programs totaled 5,970,729 claims for the week ending May 19 compared to 6,137,862 claims the prior week and 7,610,491 claims last year.
Jobless Claims Categories
The jobless claim report measures two categories: 1) initial jobless claims and 2) continuing jobless claims. People who file for unemployment benefits for the first time qualify for initial jobs benefits. Individuals for filed for benefits for two or more straight weeks meet the basic eligibility requirement for continuing jobless claims.
Economists, policy makers and others track and review jobless claims data on a week-to-week basis. They pay particular attention to the ratio of initial jobless claims to continuing jobless claims. The week to-week volatility in the job claims report usually mirrors changes in the unemployment rate. In addition, the jobless claims report sheds light on the overall heath of the U.S. economy –a decrease in jobless claims means a healthy economy and vice versa.