Claims for federal extended benefits rise 68,000 to 3.79 million
By Rex Nutting, MarketWatch
WASHINGTON (MarketWatch) - The number of initial claims for state unemployment benefits fell by 33,000 to a seasonally adjusted 521,000 in the week ending Oct. 3, the Labor Department reported Thursday.
It's the fewest initial jobless claims since the first week of January. The four-week average of new claims fell by 9,000 to 539,750, also the lowest since January.
Economists surveyed by MarketWatch expected initial claims to fall to about 540,000. The level of initial claims in the week ending Sept. 26 was revised up by 3,000 to 554,000. See Economic Calendar.
The number of people continuing to claim regular state jobless benefits fell by 72,000 to a seasonally adjusted 6.04 million in the week ending Sept. 26, the fewest since late March. The insured unemployment rate (the proportion of covered workers who are collecting benefits) fell to 4.5% from 4.6%.
The four-week average of continuing claims fell by 16,000 to 6.14 million. Read the full report.
Because unemployment is so high and so persistent, the federal government has created two programs to provide extended benefits beyond the typical 26 weeks. The number of people collecting extended federal benefits rose by 68,000 to 3.79 million, not seasonally adjusted.
Including those federal programs, the number of people claiming benefits of any kind in the week ending Sept. 19 was 9.36 million, not seasonally adjusted, down from 9.42 million in the previous week.
The decline in continuing state 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 regular state unemployment benefits.
Most likely, both explanations are in play.
Compared with a year ago, initial claims are up 13%, while continuing claims are up 70%.
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 9.8% in September.
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 August, the exhaustion rate was 52%, the highest on record dating back to 1972.
In September, a record 5.4 million people had been unemployed for longer than six months, according to the separate household survey of employment.
Many of those who exhaust their state benefits are eligible to collect under special federal programs, for a maximum total of 79 weeks. 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 exhausted 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.
Congress is considering legislation to extend benefits past the new year.
