Jobless Claims Continue in the Wrong Direction

The Department of Labor’s Unemployment Insurance Weekly Claims Report was released this morning for last week. Today’s 423,000 keeps us above the 400K level, where it has been for 23 of the last 24 weeks. The less volatile and closely watched four-week moving average is now at 22 consecutive weeks above 400K and has been rising for the past five weeks. Here is the official statement from the Department of Labor:

In the week ending September 17, the advance figure for seasonally adjusted initial claims was 423,000, a decrease of 9,000 from the previous week’s revised figure of 432,000 [an upward revision from 428,000]. The 4-week moving average was 421,000, an increase of 500 from the previous week’s revised average of 420,500.

The advance seasonally adjusted insured unemployment rate was 3.0 percent for the week ending September 10, unchanged from the prior week’s unrevised rate.

The advance number for seasonally adjusted insured unemployment during the week ending September 10 was 3,727,000, a decrease of 28,000 from the preceding week’s revised level of 3,755,000. The 4-week moving average was 3,742,000, a decrease of 6,500 from the preceding week’s revised average of 3,748,500.

Today’s number was worse than the Briefing.com consensus estimate of 418,000 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 dshort.com.

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

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