Merk Investments: Jobless Claims: Week Ending September 27

Initial jobless claims ending the week September 27 increased 1K to 497K. The four week moving average climbed to 474K and continuing claims, which are released with a one week lag increased to 3.591mln for the week. The seasonally adjusted four week moving average inside the continuing clams series advanced to 3.528mln.

The increase in initial claims is at its highest level seen since 2001. Claims continue to be impacted by the combination of continuing layoffs and the dislocation in the aftermath of the twin hurricanes that hit the Southeast in September. According to the Labor Department the job losses due to the hurricane caused initial claims to increase by about 45K for the week. More importantly, the number of individuals that continue to collect unemployment insurance claims is the highest level seen since September of 2003. The slow and steady march upward in the continuing claims series supports our forecast for the rate of unemployment to increase to 6.2% ahead of tomorrows September non-farm payroll report. Based on recent data we not expect the rate of unemployment to increase to 6.9% by mid 2009.

Joseph Brusuelas
Merk Investments
Chief Economist/VP Global Strategy

This report was prepared by Merk Investments LLC, and reflects the current opinion of the author.  It is based upon sources and data believed to be accurate and reliable.  Opinions and forward looking statements expressed are subject to change without notice.  This information does not constitute a solicitation or an offer to buy or sell any investment product, nor provide investment advice. Merk Investments does not own any of the stocks mentioned; this is not an offer to buy or sell any security mentioned.