The latest weekly jobless claims report covering the period ending October 15, showed claims stubbornly holding above the 400K threshold. However, once again, we’re cataloging here the weekly trend of claimants falling out of coverage, an event we view as both suspect and concerning.
The Department of Labor reported that the weekly flow of benefits filers decreased by 6,000 in the latest period, to 403K (against a revised higher prior period). Illustrating just how stubbornly weekly claims have been holding on above the 400K level, the four-week moving average of jobless claims also measured 403K.
So, with claims running so high, why is it that the number of people covered under all programs, which includes the still running extension program, continues to decline? This week, the number of Americans covered by any program fell by 124,239, to 6.7 million. That’s a big number, and it continues a trend that has run true for months now.
Where are all those Americans going to? They are not getting jobs. Last month’s data showed a dramatically high level of announced corporate layoffs and a troubling unemployment rate. I will once again reiterate the reason I think this contrasting data point exists, and where I think these Americans have been heading to.
The hoops that the government requires Americans to jump through, to keep them actively seeking work, are strictly adhered to. I suspect the government has not loosened the rules one iota due to the obviously impossible labor environment. In fact, I believe the rules are being kept religiously. So the unemployed man, who for any reason fails to produce his evidence of a job search, is dropped out of the program. There are no ifs, ands or buts about it, except the butt kicking the jobless get out the door.
Why would the government want to run the program this way? Firstly, I expect it’s more a matter of the way things work in government jobs (example the DMV) than an active strategy. Besides, it’s probably true that some people exploit the system, and by some means, enjoy getting by on a few hundred dollars a week. Those people need a tight system. However, in today’s environment, I expect we’re sending too many good people out into the cold for bad reasons. And where are they going to? Well, we’ll find them in the foreclosure numbers, the credit default figures and in rising crime data. Oh, and I bet more than a few can be found at Occupy Wall Street demonstrations across the country. So perhaps then, government program policemen might exercise better judgment, before chaos rules.
As always, I like to conclude this regular reporting with the state data:
The highest insured unemployment rates in the week ending October 1 were in Puerto Rico (4.9), Alaska (3.8), Pennsylvania (3.5), New Jersey (3.4), Virgin Islands (3.4), California (3.3), Nevada (3.2), Oregon (3.2), Connecticut (3.1), Arkansas (2.9), and Illinois (2.9).
The largest increases in initial claims for the week ending October 8 were in California (+13,882), New York (+8,568), Texas (+4,644), Washington (+3,728), and Pennsylvania (+3,640) while the largest decreases were in Wisconsin (-1,536), North Carolina (-856), South Carolina (-818), and Virgin Islands (-33).
The shares of employment services firms were slightly higher to mixed on the little changed industry relative data Thursday, with Monster World Wide (NYSE: MWW) up 2.1%, Korn Ferry International (NYSE: KFY) up 1%, 51job (Nasdaq: JOBS) up 1%, Kelly Services (Nasdaq: KELYA) up 0.6%, Manpower (NYSE: MAN) about even, Robert Half (NYSE: RHI) down 0.2%, and General Employment Enterprises (AMEX: JOB) down 1.8%.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.