The Unemployment Insurance Weekly Claims Report was released this morning for last week. The 23,000 decline in new claims number is the largest percent decline since September 24 and the fifth largest of the year. The less volatile and closely watched four-week moving average came in at 393,250, the fourth week below 400K for the 4-week MA after 29 consecutive weeks above that benchmark. Here is the official statement from the Department of Labor:
In the week ending December 3, the advance figure for seasonally adjusted initial claims was 381,000, a decrease of 23,000 from the previous week’s revised figure of 404,000. The 4-week moving average was 393,250, a decrease of 3,000 from the previous week’s revised average of 396,250.
The advance seasonally adjusted insured unemployment rate was 2.8 percent for the week ending November 26, a decrease of 0.2 percentage point from the prior week’s unrevised rate.
The advance number for seasonally adjusted insured unemployment during the week ending November 26 was 3,583,000, a decrease of 174,000 from the preceding week’s revised level of 3,757,000. The 4-week moving average was 3,667,250, a decrease of 20,500 from the preceding week’s revised average of 3,687,750.
Today’s seasonally adjusted number came in well below the Briefing.com consensus estimate of 395K and also Briefing.com’s less optimistic forecast of 400K.
As we can see, there’s a good bit of volatility in this indicator, which is why the 4-week moving average (shown in the callouts) is a more useful number than the weekly data.
Occasionally I see articles critical of seasonal adjustment, especially when the non-adjusted number better suits the author’s bias. But a comparison of these two charts clearly shows extreme volatility of the non-adjusted data, and the 4-week MA gives an indication of the recurring pattern of seasonal change in the second chart (note, for example, those regular January spikes).
Because of the extreme volatility of the non-adjusted weekly data, a 52-week moving average gives a better sense of the long-term trends.
The Bureau of Labor Statistics provides an overview on seasonal adjustment here (scroll down about half way down). For more specific insight into the adjustment method, check out the BLS Seasonal Adjustment Files and Documentation.
For a broader view of unemployment, see the latest update in my monthly series Unemployment and the Market Since 1948.
Doug Short Ph.d is the author of dshort.com.