You might not know it from today’s headlines, but unemployment continues strong with this week’s Unemployment Insurance Weekly Claims Report. The headline from Yahoo Finance was Jobless benefit rolls drop sharply to nearly 6.7M. It sounds good, but the article gives an explanation that is less than copacetic:

The total number of people on the unemployment insurance rolls dropped for the first time since early January, the government said Thursday, while new claims for benefits rose slightly.

The report shows that job losses are easing after companies made deep cuts earlier this year. But nearly half of recipients at the end of last month had exhausted the 26 weeks of benefits provided under the regular state program without finding work, according to Labor Department data. That’s a record and compared with about 36 percent in December 2007, when the recession began.

“It is unlikely that new hiring has picked up in any meaningful fashion,” Joshua Shapiro, chief economist with MFR Inc., a consulting firm, wrote in a note to clients.

The department said the total unemployment insurance rolls fell by 148,000 to 6.69 million in the week ending June 6, the largest drop in more than seven years.

The drop also breaks a string of 21 straight increases in continuing claims, the last 19 of which were records. A dip in continuing claims several weeks ago was later revised higher. Initial claims rose by 3,000 to a seasonally adjusted 608,000 in the week ending June 13, above analysts’ expectations. The four-week average, which smooths fluctuations, fell by 7,000 to 615,750. Continuing claims data lags initial claims by one week.

It is undeniably bad news that roughly half of the claims are falling off the end of the benefits train. That’s a lot of people who cannot find work after half a year of unemployment benefits. And it’s not just an issue of the percentages (in fact, it seems like a fairly odd thing for the article to compare. Average duration of unemployment seems like a more meaningful statistic). The number of people on UI is significantly higher now than it was a year and a half ago. This news is unfortunate in a number of ways. One, it means that continuing claims is not going to be as useful as it has been in the past. Two, it means that there are a lot of people who really need things to turn around. Incidentally, the previous week’s initial claims number was revised from 601k to 605k, so the increase by 3000 is within the current revision noise.

A glance at the unadjusted statistics (those that correspond to actual people instead of trend data) tells a somewhat cheerier story. From the actual report:

The advance number of actual initial claims under state programs, unadjusted, totaled 554,405 in the week ending June 13, a decrease of 26,791 from the previous week. There were 349,255 initial claims in the comparable week in 2008.

The advance unadjusted insured unemployment rate was 4.5 percent during the week ending June 6, a decrease of 0.1 percentage point from the prior week. The advance unadjusted number for persons claiming UI benefits in state programs totaled 6,058,847, a decrease of 85,499 from the preceding week. A year earlier, the rate was 2.1 percent and the volume was 2,799,719.

There still doesn’t appear to be a source of hiring. Worse, there’s a potential for another wave of unemployed. Businesses reporting earnings have not been improving their top line. Instead, they’ve been getting earnings through cost savings. That’s taken the form of fewer inventory purchases and layoffs. But companies are running pretty bare right now (that’s my perception, I have no evidence). If things continue the way they are, many companies are going to go belly up. Then the remaining skeleton crew will hit the unemployment numbers. It’s been weird, company behavior has been pretty synchronized. Layoffs have hit entire sectors at the same time (sometimes in multiple waves). I’m a little concerned corporate failures might exhibit similar timing. They certainly did for the financials at the beginning of this crisis, but I don’t know of a compelling reason why other industries, save auto suppliers, should or should not follow.

Let’s look at the good / bad lists this week. The story is almost the opposite of last week.

The good list (-1000 or more): AR, PR

The bad list (+1000 or more): CO, NV, WV, OR, MD, GA, AL, MA, MN, MO, VA, KY, IN, SC, NJ, TX, TN, MI, NC, IL, NY, CA, OH, FL, PA

PA (the worst) was +6,861 vs AR (the best) at -1,206.

It’s important to remember that the good/bad lists reflect the unadjusted data from the previous week. We knew that last week’s report had a huge seasonal component. That’s what is showing up here (in spades). In the excuses (comments) column, there’s a lot of blame for the automobile, manufacturing, and construction industries.

-By Guest Blogger crazynutjob.

Read all of crazynutjob’s unemployment report recaps [here].