Jobless Claims Finally Making Progress

The Unemployment Insurance Weekly Claims Report was released this morning for last week. The 19,000 decline in new claims number matches the 19,000 decline from a week ago (factoring in the 4,000 upward adjustment for last week). These are the largest declines since the 33,000 drop for the week ending on September 24. The less volatile and closely watched four-week moving average came in at 387,750, the fifth 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 10, the advance figure for seasonally adjusted initial claims was 366,000, a decrease of 19,000 from the previous week’s revised figure of 385,000. The 4-week moving average was 387,750, a decrease of 6,500 from the previous week’s revised average of 394,250.

The advance seasonally adjusted insured unemployment rate was 2.9 percent for the week ending December 3, unchanged from the prior week’s revised rate.

The advance number for seasonally adjusted insured unemployment during the week ending December 3 was 3,603,000, an increase of 4,000 from the preceding week’s revised level of 3,599,000. The 4-week moving average was 3,666,250, a decrease of 5,000 from the preceding week’s revised average of 3,671,250.

Today’s seasonally adjusted number came in well below the consensus estimate of 390K.

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). 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 monthlyseries Unemployment and the Market Since 1948.

Doug Short Ph.d is the author of