New Claims for Unemployment Insurance Increase Sharply and Unexpectedly
The data on new claims for unemployment insurance brought a surprise. Claims are up sharply over last week. The Department of Labor reports:
In the week ending Jan. 22, the advance figure for seasonally adjusted initial claims was 454,000, an increase of 51,000 from the previous week's revised figure of 403,000. The 4-week moving average was 428,750, an increase of 15,750 from the previous week's revised average of 413,000.Here's a graph showing the four week moving average of new claims (via Calculated Risk -- click to enlarge):
As you can see, the average has been falling recently, and the hope is that this is simply a temporary aberration in the downward trend.
Why did claims turn upward? One possibility is the weather is making hard to process a backlog of claims, but weather makes it harder to file claims too so it's not clear that weather is the definitive source of the increase. What the increase in claims does show is the continued softness and uncertainty in the labor market. We have not yet reached the time when we can depend upon employment growing robustly. We are barely creating enough jobs to keep up with unemployment as it is, and this reminds us that labor markets are still relatively fragile.
The other piece of news today was the fall in new orders for durable goods. Orders fell by 2.5% last month, an unexpected decline, and this is the fourth decline in the last five months, This is yet another signal that the economy is not yet on firm footing.
We appear to have turned the corner, but we still have a long way to go to get back to full employment even under the best of conditions. Today's data does nothing to improve that outlook, if anything the expected recovery time is now longer.
