As Atlanta Fed President Dennis Lockhart noted in a November speech:
A framework for assessing labor market conditions needs to include forward indicators of labor market health, such as falling claims for unemployment insurance.
Initial unemployment insurance claims data are released weekly by the U.S. Department of Labor for the nation and by state. The weekly data tend to be volatile, so the data are also often reported as a four-week moving average.
Initial claims, which count the number of workers who have filed to receive unemployment insurance for the first time, measure emerging unemployment. As President Lockhart noted, these data provide insight into developing economic trends. For example, if a large number of people are filing for unemployment insurance for the first time, it's a sign that the labor market is weakening. A weakening labor market can affect consumer confidence and spending as well as business decisions regarding future investment. On the other hand, a decline in the number of individuals filing for unemployment insurance may indicate a strengthening labor market.
Recent data for initial claims have been largely steady in 2012, averaging between 40,000 and 50,000 for the six states in the Atlanta Fed’s district (see the chart). While well off the highs reached during the height of the recession, stability in initial claims does support the notion of slow improving in regional labor markets. A further decline to levels seen prior to the recession—between 30,000 and 40,000—would be even better and would point to labor markets experiencing an even stronger comeback.
The Atlanta Fed is currently conducting a poll of our business contacts through our Regional Economic Information Network (REIN), asking them several employment-related questions. The results, we hope, will allow us to better understand businesses' hiring plans for 2013. Stay tuned...
By Michael Chriszt, a vice president in the Atlanta Fed's research department