Jobless Claims ‘Back on Track,’ Remain Elevated

After several weeks of increased numbers, initial claims for unemployment insurance fell significantly last week, suggesting a bit of stabilization for an extremely volatile economic metric.

For the week ending October 17, the Labor Department reported the advance figure for seasonally adjusted initial claims fell to 787,000, a decrease of 55,000 from the previous week’s revised level. Additionally, the previous week’s level was revised down by 56,000 from 898,000 to 842,000. The four-week moving average dropped to 811,250, a decrease of 21,500 from the previous week’s revised average.

Labor reported the advance seasonally adjusted insured unemployment rate fell to 5.7 percent for the week ending October 10, a decrease of 0.7 percentage point from the previous week’s revised rate, which itself was revised down by 0.4 from 6.8 to 6.4 percent.

The advance number for seasonally adjusted insured unemployment during the week ending October 10—also known as continued claims—fell to 8,373,000, a sharp decrease of 1,024,000 from the previous week’s revised level. The previous week’s level was revised down by 621,000 from 10,018,000 to 9,397,000. The four-week moving average was 10,085,750, a decrease of 1,093,500 from the previous week’s revised average.

Sarah House, Senior Economist with Wells Fargo Securities, Charlotte, N.C., said this week’s numbers appear to offer a more accurate picture of the labor market, with a processing pause in California now ended. However, she noted while claims are improving again on trend, “they remain elevated.”

“The revisions and sizeable drop comes as California has completed its processing pause, with the national figures no longer holding the most populous state’s figures constant,” House said. “The trend in initial claims has resumed its gradual descent, but filings remain extraordinarily high seven months into the crisis.”

Additionally, House said the one-million drop in continuing claims comes with a caveat. “The drop comes as workers are exhausting those benefits,” she said. “Since the September survey week, initial claims have fallen 79,000 and suggest the labor market’s recovery remains intact, but the pace continues to slow.”