Initial Claims for the Week Ended Nov 14

Updated 19-Nov-09 19:26 ET

Highlights

Initial claims met consensus expectations of 504,000 workers as new claims held at 505,000 for the week ending Nov. 14. Initial claims for the week ending Nov. 7 were revised up to 505,000 from 502,000.

Even though the consensus expected claims to maintain its current level, the market has been anticipating claims to drop below the 500,000 barrier.
A drop below 500,000 would be a purely psychological benefit as the unemployment rate would still continue to increase until claims falls well below 400,000.
Since July, claims numbers would bounce around through a fairly narrow band before moving slightly lower. For the last three weeks the claims figures have ranged between 500,000 and 515,000. It seems claims break through the lower bound every four weeks, which means that claims will stay about 500,000 for one more week before breaking below.
The drop in continuing claims was not due to workers finding new jobs, but due to people running out of unemployment benefits.
Congress passed an extension to the unemployment benefits and the effects should be seen in next week's data release.
As a result, we expect the decline in continuing claims to abruptly stop and start inching back up toward a new equilibrium base.
A significant decline in claims over the next few weeks would signal that people have started to find new jobs.

New claims have finally broken free of their 550,000-600,000 bounds, but they are still well above the peak of 400,000 during the last recession. As major companies finish their labor restructuring, many of the newly unemployed are coming from smaller businesses. This tends to cause more hardship on Main Street as many of these workers are unprepared for their job loss.

Category	Nov 14	Nov 7	Oct 31	Oct 24	Oct 17
Initial Claims	505K	505K	514K	532K	531K
4-Wk Moving Avg	514K	521K	524K	527K	532K
Continued Benefits		5611K	5650K	5768K	5817K
4-Wk Moving Avg		5712K	5795K	5891K	5966K