Initial claims grew by 15,000 for the week ending March 18th. This more than reversed the prior week’s 6,000 decline however, the trend in initial claims remains favorable. With 5.6 million job openings (as of January 31st), according to the Job Opening and Labor Turnover (JOLT) report from the Bureau of Labor Statistics, there is little reason to expect claims will escalate any time in the foreseeable future.
The seasonally adjusted (SA), initial claims total stood at 258,000 and the SA four week moving average at 240,000. The change from the end of the great recession (June 27, 2009), is now down 57%.
Figure 1 charts SA initial claims all the way back to 1967. The current level of 258,000 is the lowest level since the early 1970’s and well below the 300,000 threshold which has traditionally meant a solid economy with a high probability of sustained economic growth.
For the week ending February 25th, continuing claims for unemployment insurance stood at a SA rate of 2,069,000 while the four week moving average registered 2,070,250. Claims fell 166,500, or 7.4% on a year on year comparison. Figure 2 presents a long-term (1968 to present, Y axis on a reverse scale), 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. It also puts into perspective the severity of the great recession relative to previous recessions.
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.