US initial jobless claims surprisingly jumped to a 7-year high of 516K during the week ended November 8, while continuing jobless claims for the week ended November 1 rocketed to 3897K, the highest reading since December 1982 which suggests that the US labor markets continue to deteriorate. Indeed, it was just last week that we saw the US unemployment rate jump to a more than 14-year high of 6.5 percent, but comparing historical figures, it looks like the unemployment rate could be climbing much higher. Looking at a chart of continuing claims versus the unemployment rate going back to 1970, it's clear that the figures used to be significantly more correlated. However, changes to the methodology used by the Bureau of Labor Statistics (BLS) to calculate the unemployment rate since 1994 have weakened the link. It is also worth noting that a rise in the US participation rate from roughly 60 percent in 1970 up to 66.1 percent in October 2008 has likely lessened the impact very slightly.
Regardless, one thing is obvious: unemployment is rising, and with the economy still in the process of slowing, it is unlikely to improve anytime soon.
US Initial Jobless Claims (Weekly) Source: Bloomberg US Continuing Jobless Claims (Weekly) vs. US Unemployment Rate (Monthly) Source: Bloomberg