Weekly Unemployment Claims Drop After Large Upward Revision
The Department of Labor’s Unemployment Insurance Weekly Claims Report was released this morning for last week. As we saw in the previous week, the headline number is a decrease from the previous week (good news), but the previous week had been upwardly revised — in this case, double the headline decrease (the bracketed bold text below is my annotation). But check out the positive spin on CNBC and Bloomberg. Here is the official statement from the Department of Labor:
In the week ending March 26, the advance figure for seasonally adjusted initial claims was 388,000, a decrease of 6,000 from the previous week’s revised figure of 394,000 [up 12,000 from 282,000]. The 4-week moving average was 394,250, a increase of 3,250 from the previous week’s revised average of 391,000.The advance seasonally adjusted insured unemployment rate was 3.0 percent for the week ending March 19, unchanged from the prior week’s unrevised rate of 3.0 percent.
The advance number for seasonally adjusted insured unemployment during the week ending March 19 was 3,714,000, a decrease of 51,000 from the preceding week’s revised level of 3,765,000. The 4-week moving average was 3,765,250, a decrease of 32,750 from the preceding week’s revised average of 3,798,000.
Today’s number was slightly above the Briefing.com consensus expectation of 383,000 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.
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