U.S. Initial Claims Drop to a Still Elevated Level in the Week Ending November 17

US initial claims dropped by a sizeable 41,000 in the week ending November 17, 2012 but remained elevated at 410,000 following a revised 90,000 jump to an upwardly revised 451,000 level (was 439,000) the previous week. The level of claims in the latest week was in line with market expectations.

The US Labor Department noted that disruptions due to Hurricane Sandy continued to affect the weekly data with some states still filing excess claims due to the storm. Some distortions may also have resulted from Veteran's Day occurring during the reported week.

The four-week moving average of initial claims climbed to 396,250 from 386,750 the previous week. Continuing claims for the week ending November 10, 2012 slipped by 30,000 to 3,337,000 and from 3,367,000 the previous week.

Given distortions caused by Hurricane Sandy, the initial claims numbers in recent weeks likely provide little indication of underlying labour market conditions. With that said, the latest weekly reading corresponds with the reference week for the November 2012 payroll employment survey, and as a result, the still elevated level of claims points to some risk that hurricane disruptions could be evident in the November payroll employment report as well.

US initial claims fell by a sizeable 41,000 to an expected 410,000 level in the week ending November 17, 2012; however, this still left the level elevated following an outsized 90,000 jump to an upwardly revised 451,000 level the previous week. Excluding the level from the previous week, this still left the level of claims at its highest level since September 2011. Much of the rise in the level of claims during the last two weeks likely resulted from disruptions due to Hurricane Sandy and potentially from Veteran's Day, which was observed during the latest reported week. The four-week moving average of initial claims climbed to 396,250 from 386,750 in the previous week. Continuing claims, for the week ending November 10, 2012, fell by 30,000 to 3,337,000 and from 3,367,000 the previous week.

Despite the drop in the latest week, the level of initial claims remained elevated at its second-highest level since September 2011, which has been surpassed in that period only by the prior week's outsized reading. Given distortions caused by Hurricane Sandy and potentially Veteran's Day, the initial claims numbers in recent weeks likely provide little indication of underlying labour market conditions. With that said, the latest weekly reading corresponds with the reference week for the November payroll employment survey, and as a result, the still elevated level of claims points to some risk that hurricane disruptions could be evident in the November payroll employment report as well. With that said, it is also possible that claims continue to be filed from work disruptions earlier in the month, and in any case, any effect on payroll employment is likely to be temporary with any hurricane-related weakness in November likely to be reversed in December.

IMOH, Patrick E.
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