Unemployment Claims Are Rising, Due to the Weather -- or Not

A series of major snow storms and frigid temperatures that blanketed much of the country in recent weeks may have helped push up first-time weekly unemployment insurance claims. The Labor Department reported on Feb. 25 that they rose 22,000, the second consecutive week that claims have risen unexpectedly. But some analysts believe the rise may be due to other causes as well.

The latest week's numbers brought initial claims to a seasonally adjusted 496,000. Analysts polled by Thomson Reuters had expected them to drop by 19,000 to 455,000.

The Associated Press reported that a Labor Department analyst said state agencies in mid-Atlantic and New England states that process unemployment claims were closed last week due to major snowstorms, and that the clearing out of backlogs may have accounted for some for the increase.

The heavy snows and bad weather also caused unexpected layoffs or prevented some companies from hiring workers. Industries that are sensitive to the weather, such as construction and retail, often suffer job losses when weather turns bad.

Just a Jersey Problem?

Michael Montgomery, an economist at IHS Global Insight believes the impact of the weather on the unemployment numbers for this week is overblown. He says the connection to the weather was made because the Labor Department report said New Jersey closed some state offices due to the snow and a state furlough day, which pushed claims into the following week. He was aware of only one other state affected by the storms that reported office closings.

Montgomery said the 22,000-claim increase was relatively small, only about a 4% jump. "It could have been a random lumping together of layoffs," he says, adding that the Washington's Birthday holiday may also have pushed claims into the week in question. He reasoned that only about one-third of the increased unemployment filings may have been weather-related.

John Challenger, CEO of Challenger, Gray & Christmas, concedes that weather can throw off data collection of unemployment claims, but he doesn't believe that's the main reason they increased this week.

"We're in a three-steps-forward, two-steps-back economy, and it's going to be a rocky recovery," Challenger says. "There will be times when employment goes into retrograde."

Construction Workers Out of Work

Still, others believe the weather has made a difference. "Since the start of February, the claims started at about 440,000. Then we've had the storms over the last two weeks, and we've seen them creep up close to the 500,000 mark, which we haven't seen in some months," says Toon VanBeeck senior industry analyst for IBISWorld.

VanBeeck says construction workers would be more likely to file during this period when storms that dumped more than 20 inches of snow on many cities would prevent these workers from finding work for weeks at a time. North Carolina had the largest increase in claims last week, more than 5,000 due to layoffs in the construction, furniture and mining industries. Claims in Pennsylvania increased by more than 2,800 due to layoffs in the construction, service, transportation and food services.

While claims have been going up since January ended, VanBeeck says, "We should start seeing the overall jobless claim number start to decline again in March and into April." That would be an even more welcome sign of spring than warmer temperatures.

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