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NJ UI: Calm Before Storm


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Patrick O'Keefe

Director of Economic Research

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9/11/14

by Patrick J. O'Keefe, Director of Economic Research

The most recent U.S. Department of Labor unemployment insurance (UI) data for New Jersey shows that through the week ended August 30: 

  • Applications for benefits were at the lowest level since May;
  • The total number of claimants continued to drift downward;
  • The number of individuals exhausting benefits slid to six-year low.
     

View accompanying charts.

Note: The data discussed below precede the spurt in filings due to layoffs relating to the recent shutdowns in the State’s gaming industry. According to Challenger, Gray & Christmas, New Jersey ranked second among all states in August’s announcements of future job cuts. 

Initial claims (chart 1), a proxy for layoffs, declined (-10.5%) in the most recent week, reaching the lowest level since the end of May. New Jersey’s weekly drop in applications was the largest in the nation.

Adjusted for seasonal factors (chart 2), new filings fell 7.8%. 

The seasonally adjusted four-week moving average of applications (chart 3) – which adjusts for regularly recurring changes (e.g., summer school closings) and smoothes weekly fluctuations – is equivalent to its mid-June level.  

On that measure, prior to the gaming industry’s cutbacks, applications for benefits were 7.2% below the pre-recession average (i.e., the five years, 2003-2007, prior to the beginning of the downturn).

In light of the recent contraction in the State’s gaming industry, new claims are expected to rise sharply in the coming weeks.

Continuing claims (chart 4), that is individuals already receiving regular benefits, were little changed (-1.3%) in the most recent week. The claims level typically remains stable until early September, when school employees are recalled from summer furloughs.

The number of beneficiaries is 6.3% less than a year ago, but 6.0% above the average during the five years (2003-2007) prior to the recession. 

Adjusted for seasonality and weekly fluctuations (chart 6), the number of beneficiaries has declined only marginally since the end of July.

The State’s insured unemployment rate (IUR), the number of beneficiaries as a percent of total covered employment, was 3.3% for the fourth straight week.  New Jersey had the highest IUR of all states.

In sum, although New Jersey’s unemployment claims activity has been gradually improving, the recent spate of gaming-related cutbacks will very likely disrupt that trend.

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