Courtesy of Doug Short.
The Unemployment Insurance Weekly Claims Report was released this morning for last week. The 348,000 new claims is a 13,000 decrease from an upward adjustment of 3,000 for the previous week (361K, previously 358K). The less volatile and closely watched four-week moving average came in at 365,250, the 14th week below 400K after 30 consecutive weeks above that benchmark. Here is the official statement from the Department of Labor:
In the week ending February 11, the advance figure for seasonally adjusted initial claims was 348,000, a decrease of 13,000 from the previous week’s revised figure of 361,000. The 4-week moving average was 365,250, a decrease of 1,750 from the previous week’s revised average of 367,000. The advance seasonally adjusted insured unemployment rate was 2.7 percent for the week ending February 4, a decrease of 0.1 percentage point from the prior week’s unrevised rate.
The advance number for seasonally adjusted insured unemployment during the week ending February 4, was 3,426,000, a decrease of 100,000 from the preceding week’s revised level of 3,526,000. The 4-week moving average was 3,492,500, a decrease of 8,250 from the preceding week’s revised average of 3,500,750.
Today’s seasonally adjusted number came in significantly below the Briefing.com consensus estimate of 365K and likewise Briefing.com’s own estimate of 365K.
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. This metric has now fallen below 400,000 for the first time since late November 2008.
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.
