For the week ending September 2nd, initial claims for unemployment spiked by 62,000 because of hurricane Harvey to a level of 298,000. The four week moving average also moved higher, up 13,500 from the previous week’s average of 250,250. Despite this jump, the labor market remains in good shape. Continuing claims fell by 5,000 to 1.94 million for the week ending August 26th and the insured unemployment rate remains unchanged at 1.4%.
Unemployment insurance claims are a count of recipients by state of benefits mandated by federal law. Initial claims for unemployment benefits provide a proxy for layoffs, whereas continuing claims give a timely sense of the stock of unemployed workers.
Figure 1 presents a view of both seasonally and non-seasonally adjusted initial claims for unemployment insurance benefits from 2013 to present. Initial weekly claims were down 50% since the recession ended July 2009. This number was down 60% last week.
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. After the Harvey spike we are now on the edge of the “green zone”, (300,000) which means sustained economic growth according to the Department of Labor.
Historically, initial claims have spiked higher within one to two weeks after a hurricane, so the increase in the week ended September 2nd was not unexpected. It is highly likely that new claims will continue to rise in the weeks to come, especially with hurricane Irma looking like it will impact Florida. Analysts caution that this should not be overly worrisome. Job growth remains firm, averaging 160,000 over the past six months and 175,000 over the past 12 months. These numbers both exceed the number of new entrants into the job-market which is approximately 100,000.
The Bureau of Labor Statistics Job Openings and Turnover Survey, (JOLT) next release is September 12th and we will update you at that time, however, the August JOLT reported that there were 6.2M job openings on the last day of June. The job opening rate was 4.0%, so there are plenty of jobs available for workers with the right skillset that are willing to relocate. The number of job openings increased for total private (+417,000) and for government (+44,000). Job openings increased in a number of industries with the largest increases occurring in professional and business services (+179,000), health care and social assistance (+125,000), and construction (+62,000).
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.