as UI benefits lapsed and Delta headwinds abated
Today’s initial claims release make an upbeat contrast to the disappointing third-quarter GDP report.
Initial claims for state unemployment insurance programs fell 10,000 in the week ending October 23 to a seasonally-adjusted 281,000 and marked a new recovery-to-date low. Claims for the prior week were revised up a hair by 1,000. The four-week moving average of initial claims, which filters out some of the noise of the weekly numbers, fell 20,750 to 299,250 in the latest report.
The week ended October 23 was the third consecutive one in which initial claims came in under 300,000; I think of under 300,000 as low. Claims were running even lower, just above 200,000 a week, before the pandemic struck.
Insured unemployment (i.e. continued claims under regular state programs) fell a seasonally-adjusted 237,000 to 2.243 million in the week ending October 16. Claims for benefits under all unemployment programs, including Pandemic Unemployment Assistance (PUA) and Pandemic Emergency Unemployment Compensation (PEUC), fell 448,386 (not seasonally adjusted) in the week ended October 9 to 2,830,661. Continued claims under all UI programs dropped sharply in early September as PUA and PEUC programs lapsed; over half of the weekly decline in all UI programs in the week ended October 9 was due to lower claims in these two programs. Continued claims weren’t zero despite the programs lapsing, that reflects things like retroactive claims for past periods in which claimants were eligible for benefits they haven’t received yet.
The claims data show that the labor market strengthened in October, although the end of enhanced unemployment benefits clouds the data somewhat. Initial claims for state programs, which are unaffected by the end of enhanced UI programs, show that layoffs are falling in October; lower state continued claims suggest that hiring accelerated in October after a weak 194,000 nonfarm payroll jobs added in September. The claims data as well as separately released sentiment surveys for October (e.g. The flash release of the Markit services PMI and The Conference Board’s Consumer Confidence Index®) suggest job growth in the services sector accelerated this month as the Delta surge abated. The lapse in unemployment benefits probably plays some role in faster job growth although it is too early to judge its magnitude, given the rapidly changing impact of other factors affecting job growth-the pandemic, childcare availability, the rapidly changing balance of power in jobseeker-employer negotiations, supply chain dislocations that continue to weigh on manufacturing employment, and so on.
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