WASHINGTON (1/3/14)--First-time unemployment claims dropped during the week that ended Dec. 28, surprising prominent analysts who called for an increase in filings.
Labor Department data released Thursday shows initial unemployment insurance claims fell by 2,000 to 339,000. A median forecast of 26 economists polled by Bloomberg predicted claims would rise to 344,000 (Bloomberg.com Jan. 2). Moody's also expected "a rise in new filings" (Economy.com Jan.2).
The number of filings recorded for the week ending Dec. 21 were revised up to 341,000 from 338,000.
Analysts for both Bloomberg and Moody's warned that the data should be viewed skeptically. Initial holiday-season data is notoriously inaccurate, they said, and observers won't be able to confidently assess the labor market until the middle of January at the earliest.
The four-week moving average increased to 357,250 from 348,750, but both research firms said that recent data indicates a downward trend in layoffs.
Continuing claims dropped by 98,000 to 2.83 million for the week that ended Dec. 21. The decline in first-time claims over the past two weeks is at 41,000 thus far, and, before announcing its $10 billion quantitative easing tapering, the Federal Reserve revised its 2014 minimum unemployment forecast to 6.3% from 6.4%. On a non-seasonally adjusted basis, initial claims rose by 25,875, but are down 9.5% on an annual basis. Employers added 188,500 per month in 2013 through November, up from 182,750 in 2012, and initial unemployment claims averaged 342,686 in 2013--down from 374,462 in 2012 and 408,538 in 2011.
Initial claims in the fourth quarter, however, were up to 343,667 from 323,250 in the third quarter.
The economy could also see slower job and wage growth if Congress doesn't restore emergency unemployment benefits to the estimated 1.2 million people who lost them on Dec. 28. Thursday's data showed that there were 1.39 million people receiving such benefits for the week that ended Dec. 14--a 58,000 increase on a monthly basis, but a 675,000 year-over-year decrease.
A Congressional Research Service report requested by U.S. Rep. Sander Levin (D-Mich.), the ranking Democrat on the House Ways and Means Committee, estimates that the withdrawal of emergency jobless benefits will leave only about 25% of Americans receiving taxpayer-funded financial support--down from 38%, and the first time that the percentage of jobless workers receiving public aid has dropped below 30% since the data was first collected in 1946. Moody's has estimated that this withdrawal of assistance--accounting for the half-million people set to lose state-level benefits in the first quarter--will shave 0.15% off of 2014 Gross Domestic Product growth.
Senate Majority Leader Harry Reid (D-Nev.) said he would try to pass a temporary extension of the program when Congress reconvenes Jan. 6 (Businessweek Jan. 2). Bloomberg has reported that Sens. Jack Reed (D-R.I.) and Dean Heller (R-Nev.) are attempting to cobble together a bipartisan agreement to a three-month extension while Congress considers long-term fixes.
Twenty-eight states and territories out of 53 reported an increase in claims in Thursday's report for the week ending Dec. 21. Five states recorded drops in filings greater than 1,000 that week, with California and Illinois reporting the biggest declines. Michigan and New York played host to the largest rise in initial claims.