Are Jobless Claims Starting a New Trend?

The Department of Labor’s Unemployment Insurance Weekly Claims Report was released this morning for last week. Today’s 390,000 number takes us below the 400K level, which would have been the second week in row below 400K except that last week’s 397K was revised upward to 400K. The less volatile and closely watched four-week moving average comes in spot on at 400,000 and has been at or above 400K for 29 consecutive weeks. Here is the official statement from the Department of Labor:

In the week ending November 5, the advance figure for seasonally adjusted initial claims was 390,000, a decrease of 10,000 from the previous week’s revised figure of 400,000. The 4-week moving average was 400,000, a decrease of 5,250 from the previous week’s revised average of 405,250.

The advance seasonally adjusted insured unemployment rate was 2.9 percent for the week ending October 29, unchanged from the prior week’s unrevised rate.

The advance number for seasonally adjusted insured unemployment during the week ending October 29 was 3,615,000, a decrease of 92,000 from the preceding week’s revised level of 3,707,000. The 4-week moving average was 3,690,250, a decrease of 19,500 from the preceding week’s revised average of 3,709,750.

Today’s number was below the consensus estimate of 400,000 claims.

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.
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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).
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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.
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The Bureau of Labor Statistics provides an overview on seasonal adjustment here (scroll down about half way down).

Doug Short Ph.d is the author of

Learn More with Econ 101: Your Ultimate Cheat Sheet to Unemployment Numbers.