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Thursday, December 04, 2008
Jobless Claims Drop in Holiday-Shortened Week
Ken Sweet
FOXBusiness
Investors got more disappointing weekly jobless claims data on Thursday, which showed continued weakness on the labor front and foreshadowed tomorrow’s all-important November jobs report, which is expected to be especially bleak.
The U.S. Labor Department said the number of people who filed for unemployment benefits for the first time fell by a seasonally-adjusted 21,000 to 509,000 people for the week ended Nov. 29.
While the figure was better than the 11,000-person increase that economists were expecting, the continuing claims numbers and four-week moving average continue to move higher.
Continuing claims, or people on unemployment benefits for more than one week, jumped by 89,000 people to 4.09 million people for the week ending Nov. 29, the Labor Department said. That figure was the highest since Dec. 1982. The four-week moving average of unemployment benefits, which is looked at by Wall Street because it levels out the week-to-week volatility, rose by 6,250 people to 524,250 for the week.
“The underlying trend in claims remains strongly upwards, and we expect a rebound from this number over the next few weeks,” said Ian Shepherdson, Chief U.S. Economist with High Frequency Economics.
One possibility why the number of people filing for unemployment benefits declined last week is the Thanksgiving holiday, which took out one day -- two days if Black Friday is included -- that people could have sought government aid, economists said. Shepherdson said that he expects initial unemployment numbers to continue to rise sharply.
“Companies are seeking to make more, not fewer, layoffs at this point in the cycle,” he said.
These figures come out a day before the Labor Department is expected to release its November jobs report, which the market is eagerly anticipating. Economists interviewed by Thomson Reuters are expecting a jobs report that could show the nation lost as much as 300,000 jobs in November and a rise in the unemployment rate to 6.8%.
Separately, October factory orders fell by the most in eight years, the Commerce Department said Thursday, as more businesses saw their orders decline in the wake of recessionary economy.
According to the Commerce Department, factory orders in October fell by 5.1%, on top of a downward revision of September orders to -3.1%. While the decline in factory orders were the worst seen July 2000, the number was slightly better than the expected 5.4% decrease economists were predicting.
When excluding autos and other transportation goods, factory orders decreased by 4.2%.
FOX Translator
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Each Thursday at 8:30 a.m. EST, the government tells us about how many people went through one of the most unpleasant experiences of their lives: filing for unemployment help for the first time. It's essentially a survey, since state unemployment is managed by your state, not the federal government.
The report runs like clockwork, but it¿s notoriously inaccurate. For one thing, the number often has wide swings from week to week, so it's a rare event for the figures to come in exactly as economists predict. Second, it is very seasonal. Folks like school bus drivers often file claims when summer comes around, and other people get retail jobs as the holidays approach. Some economists like to use it to handicap the big monthly employment situation report, but they often do so at their statistical peril
Sometimes, weekly jobless claims make political, rather than economic, noise. If there¿s a big spike in claims, some politicians will often cite the number as a sign the economic sky is falling. But, it's important to remember what the weekly jobless numbers don't tell you: you don't know how long these folks stay unemployed, how long they've been out of work in the first place, or even if they're truly out of work and not just trying to scam the government.
Because it's so unreliable, economists usually put the past four weeks together and look at a moving average. That gives a little better picture of the overall trend, but it's still not a great indicator.
