Continuing unemployment claims fell 3,000 to 2,076,000 for the week ending February 4th, while the four week moving average came in at 2,083,750. Continuing claims have declined in four of the first five weeks of the year after climbing for six of the last eight weeks of 2016. New filings for unemployment insurance benefits moved up 5,000 to 239,000 and recorded a moving average of 245,000 for the week ending February 11th. The net number of unemployed people collecting benefits remained at 1.5% where it has been since November.
Figure 1 presents a long-term (1990 to present), view of continuing claims for unemployment insurance benefits. It reveals that we are now at the lowest level since May 2000 when the rate reached a low of 1,987,000.
While the lower number of people seeking benefits is encouraging, the labor force participation ratio remains low. The definition of labor force participation ratio is as follows: The ratio of the total number of working age of the labor force currently employed divided by the total working age population of the country. Figure 2 shows that this ratio remains stubbornly low today (59.9), compared to the pre-recession levels of greater than 62. This means that there are still a lot of people available for work that have exhausted their benefits. This can be also be witnessed by comparing the U3 or official unemployment rate of 4.8% in January to the U6 rate which was 9.4%. The U6 rate includes discouraged workers and part time workers that would prefer to have full time jobs. Still there are a great deal of job openings in the US, 5.5 million according to the Job Openings and Labor Turnover Survey (JOLTS) report in December. The problem of-course is that the skill sets do not match. Skill in demand are seeing wages bid-up while people with skills that are not in demand languish on the sidelines.
At Gerdau, we keep a keen eye on the employment numbers because we have demonstrated that there is an excellent correlation between employment levels and steel consumption. High job creation and low unemployment translate to strong steel demand and vice versa.