Jobless Claims Head Back in the Wrong Direction

The Unemployment Insurance Weekly Claims Report was released this morning for last week. Today’s 402,000 number marks a return to claims above 400K after three weeks below that much-watched benchmark. The less volatile and closely watched four-week moving average came in at a more 395,550, the third 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 November 26, the advance figure for seasonally adjusted initial claims was 402,000, an increase of 6,000 from the previous week’s revised figure of 396,000. The 4-week moving average was 395,750, an increase of 500 from the previous week’s revised average of 395,250.

The advance seasonally adjusted insured unemployment rate was 3.0 percent for the week ending November 19, an increase of 0.1 percentage point from the prior week’s unrevised rate.

The advance number for seasonally adjusted insured unemployment during the week ending November 19 was 3,740,000, an increase of 35,000 from the preceding week’s revised level of 3,705,000. The 4-week moving average was 3,683,250, an increase of 8,250 from the preceding week’s revised average of 3,675,000.

Today’s seasonally adjusted number came in above the Briefing.com consensus estimate of 390K and also Briefing.com’s less optimistic forecast of 395K.

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 monthly series Unemployment and the Market Since 1948.

Doug Short Ph.d is the author of dshort.com.