Jobless Claims Highest Since 2001

There's more bad news on the employment front today. The number of first-time claims for unemployment benefits last week hit 516,000, the highest number since September 2001 and much higher than economists had expected. The volume of claims was 32,000 higher than a week earlier.

The biggest jumps in claims were in Ohio and Michigan--two states slammed by auto industry layoffs. Continuing claims reached 3.89 million, the highest number in 25 years. That figure indicates workers are having a hard time finding jobs (if you didn't know that from your own experience already.)

Here are a couple of expert takes:

Joshua Shapiro, chief U.S. economist at MFR

Measured on a four-week moving average basis, continuing claims are [1.21 million] (47 percent) higher than they were a year ago, which points to considerably weaker labor market conditions because it indicates that those who are unemployed are finding it increasingly difficult to get re-employed.

Jobless claims data are a particularly timely source of information about labor market conditions. However, these are volatile data which need to be viewed on a trend basis. Analyzed in that manner, both initial and continuing claims point to an accelerating rate of deterioration in labor market conditions.

Ian Shepherdson, chief U.S. economist at High Frequency Economics

This is awful, though as always note that one weekly observation in these volatile numbers does not establish a trend. Still, these data do seem to be consistent with plunge in activity reported in surveys of both businesses and consumers, so we certainly cannot dismiss it as noise.

The Labor Department has not, as far as we know, cited any specific one-time factors boosting claims so the safest course is probably to assume that this reflects a genuine acceleration in the pace of layoffs. Assuming it is mirrored in a reduced pace of gross hirings too, this means we can look forward to a further deterioration in the payroll numbers.