New non-seasonally adjusted (NSA), filings for unemployment insurance benefits rose by 10,300 to 229,500 for the week ending June 24th, while the four week moving average was 228,500. On a seasonally (SA), adjusted basis, new claims rose by 2,000 to 244,000. The increase in jobless claims is not to concerning since employment statistics are not as reliable at this time of year because of the 4th of July holiday and retooling activity in the automotive sector.
Continuing claims increased by 6,000 to 1.95 million for the week ending June 17th week on week. Continuing claims have now been below 2 million for 11 straight weeks, indicating diminishing labor market slack. The insured unemployment rate was unchanged at 1.4%. The highest insured unemployment rates in the week ending June 10th were in Puerto Rico (3.2), Alaska (2.7), New Jersey (2.1), California (2.0), Connecticut (2.0), Pennsylvania (1.9), Illinois (1.8), Massachusetts (1.7), Nevada (1.6), Rhode Island (1.6), and West Virginia (1.6).
Confidence in the strength of the job market goes beyond the low headline 4.3% unemployment rate. Government statistics show that the quit rate is steadily increasing and that employees are less willingness to work Saturday, Sunday and holidays. The reason is because employees anxiety about losing their job is far less as jobs are plentiful. Workers refusing additional hours puts added stress on the organization requiring additional hires in a tight job market.
Figure 1 presents a view of initial claims (SA and NSA), for unemployment insurance benefits from 1990 to present. Initial weekly claims are down 59% since the recession ended June 2009.
Figure 2 charts the same data (SA only), from 2009 to present and includes color coding which depicts where we are on the economic spectrum. We are now solidly in the “green zone” which means sustained economic growth according to the Department of Labor. New SA filings for benefits have remained below 300,000 (the threshold associated with a strong labor market), for 144 consecutive weeks.
The labor market continues to perform well. Job openings remain elevated and have consistently exceeded hiring and layoffs remain especially low. Employers are increasingly citing that they are having difficulty finding workers with the desired skill-sets. As a result, economists expect to see rising wage pressures.
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.