The series of Hurricane’s Harvey, Irma and Maria are causing a lot of volatility in initial claims for unemployment insurance benefits. For the week ending September 30th, seasonally adjusted, (SA) initial claims for unemployment fell by 12,000 from the previous week to an unrevised level of 260,000. The four week moving average, (4WMA) moved, down 9,500 to 268,250.
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.
Continuing claims increased by 2,000 to 1.938 million for the week ending September 23rd. The insured unemployment rate held steady at 1.4%.
Figure 1 charts SA initial claims from 2009 to present. Initial claims for unemployment insurance had been steadily decreasing since the great recession ended. The highlighted spike is a direct result of people being put-out of work due to damage and floods caused by the three recent hurricanes. Despite the recent rise in claims for unemployment insurance, the total did not breech the 300,000 threshold shown on the chart as the “yellow” or caution zone. Initial claims are starting to retreat from the recent high point of 298,000 for the week of September 2nd and are now solidly in the “green” zone which represents sustained economic growth.
New claims from Puerto Rico have not been filed and processed at yet. As this backlog is worked through over the next few weeks, initial claims are likely to rise once again.
Figure 2 presents a long term view of SA initial claims for unemployment insurance benefits from 1967 to present. Initial weekly claims are down 56% since the recession ended July 2009. On this long time scale, the spike from the recent hurricanes is barely noticeable.
Five states reported an increase in not seasonally adjusted, (NSA) new filings in excess of 1,000 in the week ended September 23rd. Florida witnessed an 8,425 increase in layoffs in multiple industries to include construction and manufacturing. Michigan, Georgia, Kansas and Missouri were the other states with greater than 1000 new fillings for the week. Three states reported a decline in NSA new filings in excess of 1,000. Texas led the way with a decline of 8,283. The other two states were Ohio and New York.
Today’s employment report showed that payrolls fell by 33,000 as the storms depressed September employment numbers. The hurricanes had a “net effect” of reducing nonfarm payrolls in September, while there was “no discernible effect” on the national unemployment rate, the Labor Department said in a special note Friday.
The most recent Job Openings and Turnover Survey, (JOLT) report from the Bureau of Labor Statistics was July. The next release date is October 11th. The July release reported that there were 6.2M job openings. The quits rate and the layoffs and discharges rate were at 2.2% and 1.2%, respectively, meaning that workers see jobs as readily available and as a result are more likely to switch jobs.
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.