Jobless claims: 558,000 for week ended August 8

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The Unemployment Insurance Weekly Claims Report was released this morning, showing a slight increase in initial jobless claims to 558,000. Continuing claims came in at 6.2 million, down from 6.3 million the week before.  All of these figures are seasonally-adjusted.

On an unadjusted basis, claims were below 500K for the second week running.  In looking at the data now, I tend to use the yearly change in unadjusted initial claims as a leading indicator.  The thought here is that initial claims represent both a ‘natural frictional’ level of layoffs and another layer related to the health of employment.  I use the yearly comparison of unadjusted claims to strip out seasonal adjustment distortions. Increases in initial claims over a given period suggest that the employment market is getting weaker.

Right now, we are tracking about 100,000 above last year’s level of claims.  This is significantly less than the over 300,000 change we saw at the peak of the recession in January – but still indicative of recession.  Employment is the weak link in the recovery chain.

As we contemplate recovery, I should remind you that positive GDP growth does not mean a recovery is at hand.  It must be sustainable over the medium-term.  So while the decrease in claims numbers make recovery more likely, we won’t know that recovery has really taken hold until well into 2010.

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