Extended Unemployment: Initial, Continued and Extended Unemployment Claims December 15 2011

Today’s jobless claims report showed a notable decline to initial unemployment claims and a slight increase to continued unemployment claims as a slight rising trend was firmly called into question for initial claims.

Seasonally adjusted “initial” unemployment declined 19,000 to 366,000 claims from last week’s revised 385,000 claims while seasonally adjusted “continued” claims increased by 4,000 resulting in an “insured” unemployment rate of 2.9%.

Since the middle of 2008 though, two federal government sponsored “extended” unemployment benefit programs (the “extended benefits” and “EUC 2008” from recent legislation) have been picking up claimants that have fallen off of the traditional unemployment benefits rolls.

Currently there are some 3.64 million people receiving federal “extended” unemployment benefits.

Taken together with the latest 3.69 million people that are currently counted as receiving traditional continued unemployment benefits, there are 7.33 million people on state and federal unemployment rolls.

Reading Rates: MBA Application Survey – December 14 30 2011

The Mortgage Bankers Association (MBA) publishes the results of a weekly applications survey that covers roughly 50 percent of all residential mortgage originations and tracks the average interest rate for 30 year and 15 year fixed rate mortgages as well as the volume of both purchase and refinance applications.

The purchase application index has been highlighted as a particularly important data series as it very broadly captures the demand side of residential real estate for both new and existing home purchases.

The latest data is showing that the average rate for a 30 year fixed rate mortgage (from FHA and conforming GSE data) declined yet again, dropping 5 basis points to 4.03% since last week while the purchase application volume declined 8.2% and the refinance application climbed 9.3% over the same period.

With rates trending ever lower, the economy seemingly near recession and the FOMC members becoming more dovish by the day, it will be interesting to see how far rates on the long end can decline.  All things being equal, falling home prices, declining purchase applications and record low long lending rates all appear to indicate a deflationary for the macro-economy.

The following chart shows the average interest rate for 30 year and 15 year fixed rate mortgages since 2006 as well as the purchase, refinance and composite loan volumes (click for larger dynamic full-screen version).

Economic Jolt: Job Openings and Labor Turnover October 2011

Today, the Bureau of Labor Statistics released their latest monthly read of job availability and labor turnover (JOLT) showing that private non-farm job “openings” declined 3.20% since September climbing 13.55% above the level seen in October 2010 while private non-farm job “hires” declined 2.65% from September and rose 5.64% above the level seen in October 2010

Job “layoffs and discharges” declined 6.92% from September falling 2.61% below the level seen last year while quitting activity declined 3.56% from September remaining 9.85% above the level seen in October 2010.

It’s important to understand that job “quits” are included as a component of the “separations” data series as “quitting” is a valid means of workers “separating” from employers but their inclusion tends to create an overall procyclical trend in what would otherwise be logically thought of as a countercyclical process (i.e. downturn leads to increase in separations not decrease).