Seesaw! Weekly Unemployment Claims Drop 37,000 to 404,000

The Department of Labor’s Unemployment Insurance Weekly Claims Report was released this morning for last week.

In the week ending Jan. 15, the advance figure for seasonally adjusted initial claims was 404,000, a decrease of 37,000 from the previous week’s revised figure of 441,000. The 4-week moving average was 411,750, a decrease of 4,000 from the previous week’s revised average of 415,750.
The advance seasonally adjusted insured unemployment rate was 3.1 percent for the week ending Jan. 8, unchanged from the prior week’s unrevised rate of 3.1 percent.

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.

weekly-unemployment-claims

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).

weekly-unemployment-claims

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). For more specific insight into the adjustment method, check out the BLS Seasonal Adjustment Files and Documentation.

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

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