Courtesy of Doug Short.
The Unemployment Insurance Weekly Claims Report was released this morning for last week. The 368,000 new claims number was a larger than forecast 38,000 increase from the previous week. The less volatile and closely watched four-week moving average, which is usually a better indicator of the recent trend, rose from 351,750 to 352,000. Here is the official statement from the Department of Labor:
In the week ending January 26, the advance figure for seasonally adjusted initial claims was 368,000, an increase of 38,000 from the previous week’s unrevised figure of 330,000. The 4-week moving average was 352,000, an increase of 250 from the previous week’s unrevised average of 351,750.
The advance seasonally adjusted insured unemployment rate was 2.5 percent for the week ending January 19, unchanged from the prior week’s unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending January 19 was 3,197,000, an increase of 22,000 from the preceding week’s revised level of 3,175,000. The 4-week moving average was 3,192,250, a decrease of 9,750 from the preceding week’s revised average of 3,202,000.
Today’s seasonally adjusted number was above the Briefing.com consensus estimate of 345K, but Briefing.com’s own estimate was closer to the mark with their 365K forecast.
Here is a close look at the data over the past few years (with a callout for the several months), which gives a clearer sense of the overall trend in relation to the last recession and the trend in recent weeks.
As we can see, there’s a good bit of volatility in this indicator, which is why the 4-week moving average (the highlighted number) is a more useful number than the weekly data. Here is the complete data series.
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. I’ve now added a linear regression through the data. We can see that this metric continues to fall below the long-term trend stretching back to 1968.
A Four Year Comparison
Here is an overlay of the past three calendar years and the beginning of 2013 using the 4-week moving average. The purpose is to show the relative slope of improvement since the peak in the spring of 2009. Here, too, we see a clear illustration of the Superstorm rise and fall in the moving average, and the first three weeks of this year show the sharpest beginning-of-year decline during the illustrated timeframe.
For a broader view of unemployment, see the latest update in my monthly series Unemployment and the Market Since 1948.
