This week’s Unemployment Insurance Weekly Claims Report has been released. Initial claims rose to 531,000. I would have added “Unexpectedly” to the title, but most analysts were expecting a small increase. This topped the Bloomberg estimates of 510k to 525k, so I should perhaps revise that to simply state that analysts were expecting a small change in either direction. Last week’s number was revised up 6,000 to 520k. Wouldn’t it be nice to have a week revised lower for a change? Sigh. From the report:

In the week ending Oct. 17, the advance figure for seasonally adjusted initial claims was 531,000, an increase of 11,000 from the previous week’s revised figure of 520,000. The 4-week moving average was 532,250, a decrease of 750 from the previous week’s revised average of 533,000.

The advance seasonally adjusted insured unemployment rate was 4.5 percent for the week ending Oct. 10, a decrease of 0.1 percentage point from the prior week’s revised rate of 4.6 percent.

The advance number for seasonally adjusted insured unemployment during the week ending Oct. 10 was 5,923,000, a decrease of 98,000 from the preceding week’s revised level of 6,021,000. The 4-week moving average was 6,030,750, a decrease of 59,250 from the preceding week’s revised average of 6,090,000.

This is a pretty clear break from the trend we were all hoping would continue. It’s still reasonable to expect some continued moderation in initial claims. This is an economic history argument — the biggest layoffs always occur earlier in the cycle. Unfortunately, that’s not the same thing as saying things will get better (just less bad). Also, as we head into November, there’s a good chance that the seasonal adjustments will mislead. Stores are trying to bring shoppers in early. Surveys show that shoppers are planning on getting their shopping started early, presumably to spread out the pain (not actually a winning strategy for credit card purchases). The same surveys show that overall spending will be reduced from last year. If this is the case, hiring will be less bulge-shaped. This will transition from positively to negatively impacting continuing claims until after Christmas. At that point, the initial claims will be over-revised, and reality will be worse than reported. This is because the seasonal adjustments will assume a greater fall after the traditional big bulge. We’ll have plenty of warning in advance. Look for headlines lamenting reduced seasonal hiring (or rejoicing in earlier seasonal hiring).

This is all to say that once again, we enter a period where traditional hiring/firing patterns are slightly off (last year also introduced anomalies, so maybe there’s some cancellation). As a consequence, it continues to be important to also consider the unadjusted numbers. No smoothing here, so be careful to draw too many conclusions:

With the above setup, you’ll hopefully accept that I will now slowly exhale a sigh of relief in response to this report. A decrease of 49k should be appreciated, even if it was adjusted away (and then some). This is slightly mitigated by the fact that last week’s increase was greater in magnitude. I’ll aim for something more statistically significant. In the next month we should see the unadjusted initial claims number drop below where it was the prior year. That’s only happened once during this recession.

Let’s look at the good / bad lists. Absolutely no good news here, but remember that this data is a week older.

The good list (-1000 or more): CA

The bad list (+1000 or more): MI, SC, OR, PA, MO, GA, TX, WA, KY, IA, KS, MD, IL, AR, IN, WI, NY, FL

FL (the worst) was +9,976 vs CA (the best) at -7,062. Manufacturing, construction, trade, and service were all well represented in the bad list.

The advance number of actual initial claims under state programs, unadjusted, totaled 460,449 in the week ending Oct. 17, a decrease of 49,113 from the previous week. There were 416,111 initial claims in the comparable week in 2008.

The advance unadjusted insured unemployment rate was 3.7 percent during the week ending Oct. 10, unchanged from the prior week. The advance unadjusted number for persons claiming UI benefits in state programs totaled 4,898,174, a decrease of 44,913 from the preceding week. A year earlier, the rate was 2.3 percent and the volume was 3,134,390.

There was no progress on passage of the unemployment extension bill. Al Franken appears to be trying to gather media support, but the tone of the editorials on the subject has turned negative. Multiple articles argue that it will now take some sort of shock to get the bill passed. This is unfortunate, because expiring benefits don’t manifest themselves well in official statistics. People with expired benefits sort of disappear. Associated numbers aren’t that likely to deliver a shock. There’s less likely to be a big jobs loss number for the simple reason that we already lost the jobs. Foreclosures and bankruptcies will continue to climb, but there’s not likely to be a spike. The absolute numbers for any metric that measures suffering should get worse, but I’m not sure that any will be shocking. I’m hoping that the editorial tone doesn’t accurately reflect the political situation. This is still the most important short term issue for the unemployed. The long term issue, no engine for jobs growth, hasn’t changed.

-By crazynutjob.

Read all of crazynutjob’s unemployment report recaps here.