WASHINGTON (MarketWatch) - The number of people filing for state unemployment benefits for the first time fell 12,000 to a seasonally adjusted 545,000 last week, the lowest since mid-July, the U.S. Labor Department reported Thursday.
Initial claims have been in a fairly narrow range for the past nine weeks, down about 125,000 from the peak in March, but well above levels typical of a healthy economy.
The number of people claiming benefits of any kind was 9.53 million, not seasonally adjusted. Read the full report.
Economists surveyed by MarketWatch expected claims to rise to 563,000 in the week ending Sept. 12. The level of initial claims in the week ending Sept. 5 was revised up by 7,000 to 557,000. See Economic Calendar.
The survey week included the Labor Day holiday. Because state unemployment offices are closed for a day, fewer people are able to file during holiday weeks. But the seasonal adjustment factors take holidays into account.
The four-week average of new claims fell 8,750 to 563,000, the lowest in six weeks. The four-week average smoothes out the data to minimize the impact of one-time changes due to weather, strikes or holidays.
Meanwhile, the number of people collecting regular state benefits rose by 129,000 in the week ending Sept. 5 to a seasonally adjusted 6.23 million. The insured unemployment rate increased a tenth to 4.7%.
The four-week average of continuing claims fell 5,500 to 6.18 million, the lowest since April. Continuing claims peaked at 6.90 million in late June.
The decline in continuing claims in the past few months could show that companies are more willing to hire, or it could mean that more people were exhausting their benefits and moving into the extended federal benefits program, which is reported separately. Typically, people are eligible for 26 weeks of state unemployment benefits.
Most likely, both explanations are in play. The number of people collecting extended federal benefits rose by 32,000 to 3.58 million, not seasonally adjusted.
Compared with a year ago, initial claims are up 26`%, while continuing claims are up 77%.
Initial claims represent job destruction, while the level of continuing claims indicates how hard or easy it is for displaced workers to find new jobs. The jobless claims report shows businesses are still laying off workers at a rapid rate, and finding a replacement job is extremely difficult for those who've lost work. The unemployment rate rose to a 26-year high of 9.7% in August.
Benefits are generally available for those who lose their full-time job through no fault of their own. Those who exhaust their unemployment benefits are still counted as unemployed if they are actively looking for work.
More than half of those collecting state benefits ultimately exhaust their regular state benefits before finding work, usually after receiving checks for 26 weeks. In July, the exhaustion rate was 50.7%, the highest on record dating back to 1972.
In August, a record 5 million people had been unemployed for longer than six months.
Many of those who exhaust their state benefits are eligible to collect under special federal programs, for a maximum total of 79 weeks. In the week ending Aug. 29, 3.58 million people were collecting benefits through extended federal programs, up 32,000 from the previous week. The government does not report regularly on the number of people who've exhausted their extended federal benefits.
A private group has estimated that 400,000 people will exhaust their eligibility for extended benefits in September, and 1.5 million will exhaust their extended benefits by the end of the year. The extended benefit program won't take any new claims after the first of the year.
The total number of people claiming benefits of any kind, not seasonally adjusted, in the week ending Aug. 29 was 9.53 million, compared with 9.69 million the previous week.
