The number of people filing new claims for unemployment insurance rose to its highest level in over five years, while the number of people continuing to receive unemployment insurance rose by the largest amount in over ten years, the Labor Department said.
The number of first-time claims filed in the week ending July 26 rose by 44,000 to 448,000, the highest level since April 2003. Economists polled by Thomson Reuters IFR Markets were expecting only 398,000 claims in the week.
The Labor Department said much of this increase is due to an indirect response to the 2008 Emergency Unemployment Compensation (EUC) program. The federally-backed extension provides additional unemployment benefits for up to 13 weeks for people who have already exhausted their regular unemployment benefits.
Labor said that many people contacted about the program actually qualified for regular unemployment insurance instead of the extension under the EUC program, since they had since worked enough to qualify for a regular claim. As a result, initial weekly claims rose.
"It is expected that claims will be higher than anticipated for several weeks as a result of this effect, but should decrease as the states work through the pool of claimants from the 'reachback' period of EUC," Labor said.
The four-week moving average, which economists prefer because it smoothes out fluctuations in weekly data, rose by a much smaller 11,000 claims to total 393,000.
Meanwhile, the number of people continuing to receive unemployment insurance in the week ending July 19 rose by 185,000, the highest increase since June 1998. Continuing claims in the week totaled 3.282 million, the highest level since Dec. 2003. Economists polled by Thomson Reuters IFR Markets were expecting only 3.15 million claims.
Meanwhile, the four-week moving average for continuing unemployment claims increased by 42,750 to 3.175 million, the highest level since Jan. 2004.
tessa.moran@thomsonreuters.com tlm/wash/ms1
