Initial Jobless Claims Improved, But Still Look Ominous
The Department of Labor’s Unemployment Insurance Weekly Claims Report was released this morning for last week. Claims fell 16,000 from an upward revision of the previous week, but the 4-week moving average remained unchanged. This marks the tenth week above the 400K level after dropping below 400K for seven of the previous nine weeks. Here is the official statement from the Department of Labor:
In the week ending June 11, the advance figure for seasonally adjusted initial claims was 414,000, a decrease of 16,000 from the previous week’s revised figure of 430,000. The 4-week moving average was 424,750, unchanged from the previous week’s revised average of 424,750.
The advance seasonally adjusted insured unemployment rate was 2.9 percent for the week ending June 4, unchanged from the prior week’s unrevised rate of 2.9 percent.
The advance number for seasonally adjusted insured unemployment during the week ending June 4 was 3,675,000, a decrease of 21,000 from the preceding week’s revised level of 3,696,000. The 4-week moving average was 3,709,000, a decrease of 15,250 from the preceding week’s revised average of 3,724,250.
Today’s number was below the Briefing.com consensus estimate of 421,000 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.
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).
Doug Short Ph.d is the author of dshort.com.
Learn More with Econ 101: Your Ultimate Cheat Sheet to Unemployment Numbers.