New applications of jobless claims lowered in the last week of August with a total of 881,000. In a news report, the Labor Department explained that jobless claims fell by 130,000 to a seasonally adjusted 881,000.
The record shows improvement in the labor market, as it is lesser than the 950,000 estimates of economist Dow Jones. Other economists forecasted 940,000 new claims in the week ended August 29, but the forecast did not consider the alterations in the government’s formula for seasonal adjustment.
The record mirrors a healing labor market just as an adjustment in the Labor Department system to address seasonal factors. One of a kind conditions related to the Covid-19 probably resulted in exaggeration in the record of jobless claims.
According to a news report, the total decline proceeded from significant changes in data reporting instead of actual employment. Despite the decrease in numbers from previous weeks, it was not revised; therefore, difficult to compare.
However, the Labor Department failed to note the decline from the previous week’s 1.011 million to the week ended August 29 with 1.02 million computation using the old methodology, according to the Pantheon Macroeconomics chief economist Ian Shepherdson.
A problem highlighted in the previous month was the level of seasonally adjusted claims deviates from the actual number of people filing claims on a higher level. To make the reports more precise, the Bureau of Labor Statistics said it would change the adjustment method.
“The Labor Department changed its methodology from one that used seasonal adjustments to account for normal disruptions in the job market that don’t apply as much under the virus-related conditions.”according to a news report
This new method started with the current week’s report. The Bureau of Labor Statistics does not plan to alter the data to reflect the latest statistical approach.
Ongoing claims plummeted by 1.24 million to 13.254 million. Moreover, the insured unemployment rate decreased to 9.1%. The number of people currently receiving unemployment insurance as a percentage of the labor force fell by 0.8 percentage points.
Some companies are terminating employees permanently or warning they plan to do so unless there is an improvement in the situation. Hence, the conventionally unemployed may soon be permanently unemployed, making them ineligible for unemployment insurance.
“The data show that layoffs remain widespread and the recovery in the labor market is occurring at a frustratingly slow pace.”Lead US economist Nancy Vanden Houten