The number of people filing initial unemployment claims soared to 474,000 this week, surpassing the most bearish forecast of all 46 economists in a Bloomberg economic survey.

Please consider the Department of Labor Unemployment Insurance Weekly Claims Report for the week ending April 30, 2011.

In the week ending April 30, the advance figure for seasonally adjusted initial claims was 474,000, an increase of 43,000 from the previous week’s revised figure of 431,000. The 4-week moving average was 431,250, an increase of 22,250 from the previous week’s revised average of 409,000.

Weekly Claims and 4-Week Average Up 3 Consecutive Weeks

Seasonally Adjusted 4-Week Moving Average of Initial Claims

Bogus Excuses Offered

Please consider U.S. Jobless Claims Unexpectedly Jump on Auto Shutdowns

The number of claims for U.S. unemployment benefits unexpectedly rose last week, pushed up by auto-plant shutdowns and other unusual events that seasonal variations failed to take into account, the Labor Department said.

A spring break holiday at schools in the state of New York prompted workers to file claims, which the seasonal adjustment factors didn’t expect last week, the Labor Department official said. In addition, Oregon began a new emergency benefits program for the long-term unemployed that also pulled in some new claimants, he said. Finally, auto plant shutdowns due to parts shortages caused by the earthquake and tsunami in Japan also contributed to the increase, the official said.

Spring Break in New York? New Oregon Benefits?

From the first link…

The largest increases in initial claims for the week ending April 23 were in New Jersey (+5,326), Massachusetts (+4,027), Pennsylvania (+2,306), Ohio (+1,700), and Connecticut (+1,601), while the largest decreases were in Florida (-1,861), North Carolina (-1,662), Missouri (-1,618), New Mexico (-1,417), and Arizona (-1,138).

An Eye Test

Just to make sure that I am not blind, does anyone see either New York or Oregon in that list?

However, I must point out that was for the week ending April 23, not April 30. Then again, the Oregon extension kicked in for the week ending April 23.

This of course has me wondering what extended emergency benefits have to do with “initial” claims in the first place unless someone dropping off the list then coming back on a week later counts as an “initial” claim.

As a point of reference, also note the Spring Break in New York City was as follows: Monday April 18 Through Tuesday April 26 including Good Friday, Easter and Passover.

What kind of silly system allows teachers to file for unemployment benefits for a one-week recess? For that matter, why should they be able to file even for a whole summer?

Nonetheless, let’s watch to see next week if there is some huge jump for New York or Oregon. If not, this was a huge smoke-blowing exercise.

Manufacturing Slowdown Theory vs. Service Sector Theory

There is some merit to the possibility of a manufacturing slowdown caused by Japan.

However, I have a more likely explanation. Here it is: Non-Manufacturing ISM Plunges Below Prediction of All 73 Economists, New Orders Collapse, Prices Firm; Did Rosenberg Capitulate at the Top?

Rate of growth in the service sector unexpected plunged in April. Employment is barely expanding. Given the service sector is a huge percentage of the economy, and the plunge was missed by 73 of 73 economists, I will stick with my explanation vs. the explanation of the Department of Labor unless proven otherwise.

Mike “Mish” Shedlock
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