Initial claims in the US rose to 608,000 in the week ended June 13 from a revised up figure of 605,000 in the previous release. Economists had forecast a small rise in the claims and the release does not come as a significant shock despite remaining above 600K for the 20th consecutive week. Raising optimism, the less volatile three-week average fell to 615,750, the lowest since mid February. Continuing claims, however, proved a different story as the indicator posted a fall to 6687K in the week ended June 5 from 6835K previously at the end of May; jobless benefit rolls lag initial claims by one week. The percentage of the labor force on unemployment benefits actually dropped in the release to 5.0% from 5.1% on a seasonally adjusted basis, the first decline since mid December 2008. The drop is partially attributed to a decrease in new claims two weeks ago from 625K to 605K but cannot possibly account for the entirety of the drop. What is in fact occuring is that employees laid off early in the recession and still unable to find work are no longer receiving benefits which generally expire after twenty six weeks. While this may be a worrying sign of future spending and savings habits, the emergency benefits passed by Congress extend benefit rolls by up to thirty three weeks. That figure posted a sharp gain of nearly 103,000 to approximately 2.36 million.
Since the start of the recession, continuing claims have risen by more than four million while total workers receiving benefits from the government is currently above nine million. Prior to December 2007 when non-farm payrolls began to post job losses, benefit rolls stood at approximately 2.6 million. The difference of more than 6.4 million may be an early sign that June NFPs may worsen while a revision to May’s 345,000 is possible. Emergency benefits will likely continue to rise in the months ahead as continuing claims may start to ease while overall unemployment is projected to head higher. President Barack Obama, in a grim sign of upfront pessimism, made several comments alluding to expectations for more than 10% unemployment by year end, up from the current 9.4%.
Reacting on the data, the dollar has depreciated slightly against major crosses while US markets look set for a near-previous open while indices in Europe have turned slightly positive.
[B]US Initial Jobless Claims[/B]
