(AP Photo/Moises Castillo - filling out an application at a jobs fair)
The US Department of Labor (DOL) releases weekly jobless claims and continuing claims every Thursday morning, providing a current look at labor market conditions.
The data are divided into main two reports: weekly initial jobless claims and continuing claims.
Weekly initial jobless claims is a compilation of first-time claims by unemployed workers from the prior week, with the data taken from state unemployment offices across the country.
Because the numbers can sometimes be volatile on a week-to-week basis, the DOL also provides a four-week moving average, which as it name implies, takes an average of the prior four weeks.
Continuing claims differ in that the laid off worker is filing an application on a regular basis, say every two weeks, requesting benefits because he/she has yet to find employment.
After six months (in most cases), a laid off worker is no longer eligible for standard benefits and is not counted in the continuing claims data. However, he/she may be eligible for an emergency extension.
Let’s look at an example. Bob was informed by his employer on August 1 that his job has been eliminated. Bob can call his state unemployment office or go online and file his initial application with the state, which is recorded as a “weekly initial jobless claim.”
If benefits are granted, he will need to keep filing at regular intervals. Each time he files, Bob is no longer considered a “weekly initial jobless claim,” but now falls under the heading “continuing claims.”
In addition to helping individuals and families meet basic needs, compensation is also viewed as an economic stabilizer in that it can help reduce the need for draconian cuts in spending and help prevent some bankruptcies, which would both worsen a recession.
High level of importance
The report is important to stock traders and economists because it is a great indicator of the labor market and current economic activity.
If initial jobless claims are trending higher, the data are signaling falling business confidence and a slowdown or weakening in the economy as employers find they no longer need workers.
Conversely, falling claims point to a pickup in economic activity or an easing of recessionary conditions as employers are reluctant to lose workers they will need to effectively meet daily businesses activities.
The series, Economy 101: What is ...? is also available.
| For another perspective on the economy, please see Tomorrow's Economy Today. |
Comments
The e101 explanation is simplistic. Labor statistics also reflect U-6 which counts those no longer qualified for claims, those on part-time seeking full-time and those seeking employment but not through the state employment office. Latest statistic from the Dept of Labor for June is that U-6 is at 16% of the workforce.
Karl, I appreciate your comments. You are correct regarding the U-6 as it reflects the magnitude of what is happening in the labor market. In the above article, I purposely limited my explanation to jobless claims and stayed away from the unemployment rate for brevity.
Got something to say?
Examiner.com is looking for writers, photographers, and videographers to join the fastest growing group of local insiders. If you are interested in growing your online rep apply to be an Examiner today!