Initial claims U.S. state unemployment benefits fell by 2,000 to 214,000 in the Oct. 27 week, slightly below expectations for a 215,000 level and showing diminishing signs of an impact from Hurricane Michael in Florida and Georgia, data released by the Labor Department Thursday showed.
Also released at the same time, preliminary nonfarm productivity rose by 2.2%, below the 2.6% gain expected, in the third quarter on a deceleration in output growth and a smaller slowdown in hours worked growth. As a result, unit labor costs were up 1.2% in the quarter, significantly above the 0.6% gain expected, after a 1.0% decline in the previous quarter.
Unadjusted claims were down 1,944 in Florida and 2,620 in Georgia, but could rebound in the coming weeks as workers return to the affected areas. Still, it appears that the impacts from Hurricane Michael may continue to fade.
A better measure for the underlying trend of the data is the four-week moving average for initial claims. The average rose by 1,750 to 213,750.
If the number of headline claims does not change next week and there are no revisions to data from the past four weeks, the four-week average would fall by 250 as the 215,000 level in the October 6 week rolls out of the calculation.
The effects of Hurricane Michael in the coming weeks add some upside risk to both the headline level of claims and the four-week average.
Seasonal adjustment factors had expected a increase of 0.7%, or 1,299 in unadjusted claims. However, claims actually posted a decrease of 0.6%, or 1,215, to 197,518. The current week's level was below the 215,977 level in the comparable week a year ago, even with the impact of Hurricane Michael.
The level of continuing claims fell by 7,000 to 1.631 million in the October 20 week, hitting a fresh 45-year low. This is the lowest level for continuing claims since the July 28, 1973 week when it was 1.603 million.
Before seasonal adjustment, continuing claims rose by 12,502 to 1.383 million, remaining well below the 1.609 million level seen in the comparable week last year.
The four-week average for continuing claims, which tends to be a more reliable measure as continuing claims consistently fluctuate week-to-week, fell by 6,250 to 1.641 million, the lowest level since the August 11, 1973 week when it was 1.627 million.
The seasonally adjusted insured unemployment rate remained at 1.1% in the October 20 week, but is down from 1.4% in the same week a year earlier, reinforcing that the level of insured unemployment is extremely low. The unemployment rate among the insured labor force is well below that reported monthly by the Labor Department because claims are approved for the most part only for job losers, not the job leavers and labor force reentrants included in the monthly report.
The 2.2% rise in nonfarm productivity in the third quarter was due to a sharp deceleration in output to 4.1% from a 5.0% increase in the previous quarter. Hours worked rose by 1.8% in the third quarter, a slightly slower pace than the 2.0% rise in the previous quarter.
Third quarter hourly compensation was up 3.5% after a 1.9% increase in the second quarter, and real hourly compensation rose 1.4% after a 0.3% increase in the second quarter.
Nonfarm productivity was up 1.3% year/year in the third quarter, unchanged from the year/year gain in the previous quarter. At the same time, unit labor costs were up 1.5% year/year after a 1.9% year/year rise in the previous quarter.
