Jobless claims preview: Another 850,000 Americans likely filed new unemployment claims last week

Market Trading EssentialsSeptember 9, 2020

3 minutes read

filed for first-time unemployment insurance benefits last week. Such a result would mark the first time since March that jobless claims came in below 1 million for back-to-back weeks, as claims remain elevated but off their peak from the worst point of the pandemic.” data-reactid=”16″>Another 850,000 Americans are expected to have filed for first-time unemployment insurance benefits last week. Such a result would mark the first time since March that jobless claims came in below 1 million for back-to-back weeks, as claims remain elevated but off their peak from the worst point of the pandemic.

The U.S. Department of Labor (DOL) is slated to release its weekly jobless claims report at 8:30 a.m. ET Thursday. Here are the main metrics expected from the report, compared to consensus estimates compiled by Bloomberg:

Initial jobless claims, week ended Sept. 5: 850,000 expected vs. 881,000 during the prior week
Continuing claims, week ended Aug. 29: 12.904 million expected vs. 13.254 million during the prior week

Last week’s jobless claims appeared to improve considerably from the 1.011 million reported during the previous week. However, this was due to a technical change in the way the Labor Department made its seasonal adjustments, which applied for the first time to claims counted during the week ended August 28. Previous weeks’ claims were not revised to reflect the new counting method.

The change was made to account for the fact that the pandemic generated a far greater level of new claims per week than would typically occur over the course of a year, throwing off the Labor Department’s usual system of making adjustments for seasonal hiring trends.

Most economists agreed that the new methodology would produce a more accurate dataset on jobless claims during the pandemic period. It also produced a lower reported number of seasonally adjusted jobless claims than would have been generated under the previous method. Under the old method of seasonally adjusting claims, last week’s new jobless claims would have risen to 1.02 million instead of coming in at 881,000, according to an analysis by Ian Shepherdson, chief economist for Pantheon Macroeconomics.

“Last week’s plunge in new claims, to 881K from 1011K, was due entirely to a switch to additive from multiplicative seasonal adjustment factors,” analysts from TD Securities wrote in a note last Friday. “We think the new system is more accurate, but the plunge is just a technical change, and the level is still historically high.”

“Despite the high level, payrolls have been recovering, but the pace has been slowing,” they added.

Unadjusted claims have shown a clearer picture of the stalling recovery in the labor market. Last week, unadjusted new weekly jobless claims totaled 833,352, rising by nearly 7,600 and representing a third straight week of increases.

“Nearly six months into the pandemic, this is an alarming trend,” AnnElizabeth Konkel, Indeed Hiring Lab economist, said in an email.

Still, most states individually reported week-on-week declines in their number of new unadjusted claims last week, led by Florida with a decrease of more than 12,000. Claims were also down in Georgia, and flat in New York. However, California starkly broke from this trend, with the state reporting an increase of nearly 40,000 unadjusted new jobless claims to bring its one-week total to about 237,000.

Continuing claims, meanwhile, trended lower on both a seasonally adjusted a non-seasonally adjusted basis last week, reflecting a decreasing but historically elevated number of individuals still receiving unemployment benefits. On an unadjusted basis, claims last week fell by 800,000 to 13.1 million.

JOLTS jobs report showed employers had more than 6.6 million job openings in July, topping expectations by over 600,000.” data-reactid=”34″>Other economic indicators offered a more upbeat picture of the U.S. labor market. The Labor Department’s monthly jobs report released last Friday showed the U.S. economy added a greater-than-expected 1.371 million payrolls in August, and that the unemployment rate dipped more than anticipated to 8.4%. Wednesday morning, the JOLTS jobs report showed employers had more than 6.6 million job openings in July, topping expectations by over 600,000.