There are several economic data items that are extremely popular with investors. Most economists in academia and practical finance alike have heard about unemployment claims, payrolls, and unemployment data. The reasons for the widespread use of these indicators are varied. So in order to examine them in more detail, I will go through the definitions, major use examples, and explanation of their value for economic analysis and forecasting. In this first article, the basic definition of the concepts is provided along with a look at some of the caveats of their use.
Unemployment claims
To begin a claim, the unemployed worker must apply for benefits through a state unemployment agency. In order to be eligible for benefits the person applying has to match several criteria. These typically include the employment contract terminated by the employer and having worked for some time before filing the claim (most states require the time worked to be the first four out of the last five completed calendar quarters before the claim is filed). However, some additional requirements can be present in some states.
Processing the claim takes a certain time. Besides, in order to start receiving the benefits, a week after the first claim has been filed the unemployed person needs to file the second claim to get the payments for the first week of unemployment. So it is natural to separate claims into two types:
- initial claims which combine all the unemployed who have to file the claim for the first time during the most recent unemployment period;
- continued claims, which is the number of people who have already filed an initial claim and who have experienced a week of unemployment (note that continued claims data are based on the week of unemployment, not the week when the initial claim was filed).
Weekly releases of the data on claims are prepared by the US Department of Labor's Employment and Training Administration (ETA). The weekly nature of the reports is what makes them so valuable. Data comes more frequently than the usual monthly or quarterly timetable which allows earlier analysis and thus an earlier insight into what is going on in the economy.
Both historical and new data on both initial and continued unemployment claims can be accessed via the ETA website at https://oui.doleta.gov/unemploy/claims.asp.
Total nonfarm payrolls
Total nonfarm employment, typically referred to as Total nonfarm payroll, is a measure of the number of workers in the United States economy. This series are estimates of wage and salary jobs. In this way, it is not an estimate of employed persons, so an individual with two jobs is counted twice. The nonfarm nature of the data implies that the series excludes jobs in agriculture, private households, and the self-employed.
The data on the total nonfarm payroll are published monthly by the US Bureau of Labor Statistics (BLS) in the Current Population Survey (see the general description of the survey here https://www.bls.gov/cps/home.htm) and can be accessed here https://data.bls.gov/cgi-bin/surveymost.
Unemployment level
The level of civilian unemployment refers to the absolute number (i.e. not the rate which is the level of unemployment divided by the level of employment) of the unemployed people in the US economy.
As with the total nonfarm payroll, the data on the unemployment are published monthly by the BLS and can be accessed here https://data.bls.gov/timeseries/LNS13000000.