This week’s Unemployment Insurance Weekly Claims Report has been released. Like last week, the seasonally adjusted numbers fell. Unfortunately, like last week, the seasonally adjusted numbers are skewed because auto industry layoffs struck early this year. In “Jobless Claims Drop, but Clouded by Auto Shutdowns,” Yahoo Finance reports:

The number of newly laid-off Americans signing up for unemployment benefits last week, and those using this safety net over a longer period, both plunged. But the government figures released Thursday were clouded by difficulties adjusting for temporary shutdowns at auto plants.

Even if the recession ends this year as the Federal Reserve and many private economists expect, companies are expected to keep trimming payrolls. The unemployment rate will climb because companies won’t be in any mood to hire until they feel certain a recovery is firmly rooted.

The Labor Department said new applications for unemployment insurance dropped by a seasonally adjusted 47,000 to 522,000, the lowest level since early January. Economists polled by Thomson Reuters expected claims to rise to around 575,000.

A department analyst said the drop in new claims didn’t point to improvements in economic conditions. The second straight weekly decline reflected problems adjusting layoffs for temporary shutdowns at General Motors and Chrysler plants to retool for new models.

The unadjusted numbers tell the actual story. From the actual report:

The advance number of actual initial claims under state programs, unadjusted, totaled 667,534 in the week ending July 11, an increase of 86,389 from the previous week. There were 483,981 initial claims in the comparable week in 2008.

The advance unadjusted insured unemployment rate was 4.6 percent during the week ending July 4, an increase of 0.1 percentage point from the prior week. The advance unadjusted number for persons claiming UI benefits in state programs totaled 6,135,066, an increase of 63,714 from the preceding week. A year earlier, the rate was 2.3 percent and the volume was 3,118,724.

An increase of 86,389 vs. a decrease of 47,000. This is quite a swing in the seasonal adjustment due to the auto manufacturers. The only seasonal adjustment that is larger is the after-Christmas adjustment. While it is unlikely that Christmas will come early this year, the auto manufacturers certainly closed a few factories earlier than usual. I feel the need to reiterate my position that the seasonally adjusted numbers are normally quite useful for observing trends. It will take a couple weeks for the trends to re-emerge.

Let’s look at the good / bad lists.

The good list (-1000 or more): NJ, CA, NC, KS, OR, CT, WA

The bad list (+1000 or more): MN, KY, FL, IA, OH, IN, WI, NY, MI

MI (the worst) was +12,144 vs NJ (the best) at -5,030.

New Jersey and California are reverting to the norm from a recent surge in unemployment. The only other thing that sticks out in the comments column is Michigan’s “Most industries posted increases [in unemployment].” Ouch.

-By Guest Blogger crazynutjob.

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