Continuing Claims

What are Continuing Claims

Continuing claims are the number of people filing for unemployment benefits who have already filed an initial claim. In order to be included in continuing claims, the person must be covered by unemployment insurance and currently receiving benefits. They must have been unemployed for at least a week after filing the initial claim, per Department of Labor specifications. Data on unemployment claims is published by the Department of Labor on a weekly basis, allowing for frequent updates on the levels of unemployment.

Understanding Continuing Claims

Continuing claims data refers to unemployed people who have already filed a claim and who are continuing to receive weekly benefits. Continued claims are not a leading indicator for the state of the unemployment market, meaning they cannot predict changes in the market. But they are considered a good snapshot of the market because they provide evidence of the continuing direction of the economy.

Critics point to the volatility of the data which makes it somewhat imprecise as a snapshot of employment conditions. When combined with other indicators onto a four-week moving average, it provides a clearer indication.

However, this interpretation is not completely accurate since continuing claims figures excludes several groups, including workers not eligible for unemployment insurance and workers who have exhausted their benefits.

Continuing Claims vs. Initial Claims

In contrast to continuing claims, initial jobless claims measure emerging unemployment, and it is released after one week, but continued claims data measure the number of persons claiming unemployment benefits, and it is released one week later than the initial claims. For this reason, initial claims have a higher impact in the financial markets.

Many financial analysts incorporate estimates of the report into their market forecast. If a weekly release comes insignificantly different than consensus estimates this can move the markets higher or lower.

The Initial Jobless Claims Report gets a lot of press due to its simplicity and the theory that the healthier the job market, the healthier the economy: more people working means more disposable income, which leads to higher personal consumption and gross domestic product (GDP).

Why Jobless Claims Matter to Investors

Sometimes markets will react strongly to a mid-month jobless claims report, particularly if it shows a difference from the cumulative evidence of other recent indicators. For instance, if other indicators are showing a weakening economy, a surprise drop in jobless claims could slow down equity sellers and could actually lift stocks, even if only because there isn't any other more recent data to chew on. A favorable initial jobless claims report can also get lost in the shuffle of a busy news day and hardly be noticed by Wall Street. The biggest factor week to week is how unsure investors are about the future direction of the economy.