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Jobless Claims Continue to Hold at an Elevated Level

Contributed by Northern Trust

By Northern Trust

Initial jobless claims fell 6,000 to 472,000 during the week ended August 27. The four-week moving average, at 485,500, remains at an elevated level.  Continuing claims, which lag initial jobless claims by one week, have declined in three out of the last four weeks to 4.456 million.  A part of the decline in continuing claims reflects the expiration of eligibility for unemployment insurance after 26 weeks.  Claims under the unemployment insurance program flow from regular unemployment insurance claims of 26 weeks to additional claims under the Emergency Unemployment Compensation (EUC) and the Extended Benefits (EB) program.  The maximum number of weekly benefits under these programs is up to 99 weeks in some states. 

Due to delayed funding for the special programs during the Jun-July period, the assessment of these continuing claims has become tricky because some states are reporting weekly claims based on processing of insurance claims and not the occurrence of unemployment per se.  According to the Labor Department, these administrative issues are being worked out and revisions of these numbers from the second week of June should not be surprising.  The Labor Department recommends tracking these special claims on a monthly basis rather than a weekly basis.  The currently available data show declines in unemployment claims under the EUC program during June and July but this could be revised.  The main message is that jobless claims are at holding at an elevated level.

Pending Home Sales Index Recovers Slightly in July

The Pending Home Sales Index (PHSI) of the National Association of Realtors increased 5.2% to 79.4 in July.  The declines of the PHSI in May (-30%) and June (-2.8%) were a result of the expiration of the first-time home buyer credit program.  The gain posted in July is encouraging but not adequate to declare that housing market conditions are improving meaningfully.  The July increase of the PHSI raises expectations of an improvement in home sales in August/September.  Today's PHSI data were a relief after a string of disappointing housing market reports.

The opinions expressed herein are those of the author and do not necessarily represent the views of The Northern Trust Company. The Northern Trust Company does not warrant the accuracy or completeness of information contained herein, such information is subject to change and is not intended to influence your investment decisions.