Economic Alert: NJ Unemployment Claims Drop Sharply
2/02/2012
By Patrick J. O'Keefe, Director of Economic Research, J.H. Cohn
Earlier today, the U.S. Department of Labor published weekly unemployment insurance statistics, including data for New Jersey through the week ended January 21, 2012.
NJ Highlights:
- Applications complete retreat from end-of-year spike; and
- Number of beneficiaries slips from highest level since March.
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to view accompanying charts.
Initial claims (chart 1), a proxy for layoffs, fell by more than one-quarter (-25.6%), the third consecutive double-digit weekly drop. Applications were 47.7% below the post-holiday seasonal spike that occurred during the last week of 2011.
The sharp drop is similar to the post-holiday pattern seen in prior years, but it occurred earlier and was more pronounced than in the recent past. And while further declines are anticipated, the rate of deceleration is expected to slow in the coming weeks.
During calendar year 2011, there were 3% fewer cumulative claims filed (a total 615,803) than during 2010. Because of the timing of the respective post-holiday spikes (both occurred in 2011), the year-on-year gain was somewhat understated.
Continuing claims (chart 3), that is individuals receiving regular weekly benefits, were down marginally (-0.2%) in the week ended January 14. It was the first decline since mid-December. The number of claimants is expected to remain near the current level through the end of this month and then begin a sustained decline.
Although seasonal factors have elevated the claims count to the highest since late March, the total has been trending downward since mid-2009. For the 108th consecutive week, there was a year-on-year decline in the number of recipients. The total number of claimants in the week ended January 14 was 7.5% below the comparable week in 2011.
New Jersey had 32.0% fewer claimants than in March 2009, when the cyclic peak was recorded. Despite the sustained decline, however, the total number of beneficiaries was about one-third (33.6%) higher than the average weekly count during the five years (2003-2007) prior to the recession.
New Jersey’s insured unemployment rate (IUR), the number of beneficiaries as a percent of total covered employment, was unchanged at 4.3% – eighth highest among all states. During 2011’s comparable week the IUR was 4.6%.
In sum: Unemployment claims applications have completely reversed the post-holiday spike and continue to trend downward. This is a pattern typical of a stable – or modestly expanding – labor market. And, therefore, until hiring accelerates in the early spring, the total number of beneficiaries is expected to remain seasonally elevated.
Patrick J. O’Keefe is director of economic research at J.H. Cohn. He can be reached at pokeefe@jhcohn.com or 1-877-704-3500.
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