Daily Forecast Update: Unemployment Insurance Claims, Employment Productivity

November 05, 2009

By George Ratiu, Research Economist

The decline in unemployment insurance claims provides a bright spot in this week's data.
While the number of unemployed workers is still high, the drop in claims points in the right direction. A sustainable economic recovery is dependent on employment growth.
The other positive news came from the productivity figures, which rose during the third quarter at the highest rate since the same period in 2003.
The jump in productivity was driven by a 9.8 percent increase in business sector productivity (the largest since the second quarter 1972) and a 13.6 percent rise in manufacturing sector productivity (the strongest rise since the series inception in 1987).
Strong productivity growth should contain inflationary pressures allowing the Fed more flexibility in the timing of any future increase in interest rates.

The Department of Labor reported that the number of people filing for unemployment checks for the first time decreased by 20,000 last week, to 512,000 from the previous week's revised number. The four-week moving average decreased by 3,000 claims.
The total number of people receiving checks is now 5.7 million, a 68,000 decrease over the prior week. A year ago the figure was 3.9 million.

In a separate report, the Department of Labor released quarterly productivity data. For the third quarter, labor productivity rose at 9.5 percent annual rate.
On a year-over-year basis, business output was down 3.5 percent, while hours worked declined 7.5 percent, lifting productivity by 4.3 percent.
In contrast to the increase in productivity, labor costs dropped 5.2 percent in the third quarter 2009. Labor costs were down 3.6 percent compared with the same period a year ago. The decline was the largest since 1948.

This is one in a series of commentaries by the Research staff of the National Association of REALTORS®. Read more commentaries >

Comments? Questions? E-mail NAR Research.

NAR members, learn how you can add this commentary to your Web site, blog, or newsletter. Read more >