Initial Jobless Claims Finally Crack Below the Heavily Watched Number

The Department of Labor’s Unemployment Insurance Weekly Claims Report was released this morning for last week. Initial claims came in at 398,000, a drop of 28,000 from the previous week, which was revised upward by 4,000. This is the first week of seasonally adjusted claims below 400,000 after 15 consecutive weeks above the 400K level. Here is the official statement from the Department of Labor:

In the week ending July 23, the advance figure for seasonally adjusted initial claims was 398,000, a decrease of 24,000 from the previous week’s revised figure of 422,000. The 4-week moving average was 413,750, a decrease of 8,500 from the previous week’s revised average of 422,250.

The advance seasonally adjusted insured unemployment rate was 2.9 percent for the week ending July 16, a 0.1 percentage point decrease from the prior week’s revised rate of 3.0 percent.

The advance number for seasonally adjusted insured unemployment during the week ending July 16 was 3,703,000, a decrease of 17,000 from the preceding week’s revised level of 3,720,000. The 4-week moving average was 3,721,000, a decrease of 5,250 from the preceding week’s revised average of 3,726,250.

Today’s number was better than the consensus estimate of 415,000 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.

weekly unemployment 52 ma

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.