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Initial Unemployment Claims Drop to Lowest Level in 43 Years

Good News for Apartment Market

By Chuck Ehmann | Friday, November 11, 2016

The advance figure for seasonally adjusted initial unemployment claims was 265,000 for the week ending Oct. 29, an increase of 7,000 from the previous week’s revised level,  This marked the 87th consecutive week in which initial claims were less than 300,000, the longest streak since the 1970s and was the lowest week for claims since 1973.

That's good news for the apartment market, since employment is the primary driver of apartment demand.

In order to smooth out some of the volatility in the weekly data, the chart below graphs the rolling four-week average for initial claims.

An initial claim is filed by an unemployed individual after separation from an employer. When an initial claim is filed with a state, the claimant’s eligibility for unemployment insurance is determined. The count of initial claims for unemployment insurance is considered a leading economic indicator because it is a measure of conditions and trends in the country’s labor market. Although the four-week average ticked up to 257,750 in late October, the average for the week of Oct. 8 was 249,500, the lowest level of initial claims since Nov. 3, 1973, when the labor force was almost half of today’s level.

Continued claims (those applying for their second week or more of unemployment insurance) is essentially a coincident indicator of the labor market’s health and direction. Continued claims for the week ending Oct. 22 totaled 2.026 million, down 14,000 from the previous week. The four-week average for continued claims was 2.043 million that week, down 9,000 from the week before. Continued claims are also lower than before the Great Recession and are about at the level they were in 2000.

As leading and coincident indicators, initial and continued jobless claims for unemployment insurance point to an improving labor market, although some would argue that there are still issues with skills mismatching, low labor-force participation rates, the quality of jobs being created and weak wage growth to contend with.

Chuck Ehmann

Chuck Ehmann

Real Estate Economist

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