Weekly Jobless Claims Drop by 35K
The Unemployment Insurance Weekly Claims Report was released this morning for last week. The 353,000 new claims was a substantial 35,000 decline from the previous week's small upward revision of 2,000. The less volatile and closely watched four-week moving average dropped to 367,250. Here is the official statement from the Department of Labor:
In the week ending July 21, the advance figure for seasonally adjusted initial claims was 353,000, a decrease of 35,000 from the previous week's revised figure of 388,000. The 4-week moving average was 367,250, a decrease of 8,750 from the previous week's revised average of 376,000.
The advance seasonally adjusted insured unemployment rate was 2.6 percent for the week ending July 14, unchanged from the prior week's unrevised rate.
The advance number for seasonally adjusted insured unemployment during the week ending July 14 was 3,287,000, a decrease of 30,000 from the preceding week's revised level of 3,317,000. The 4-week moving average was 3,309,000, a decrease of 3,750 from the preceding week's revised average of 3,312,750.
Today's seasonally adjusted was a surprising 28,000 below the Briefing.com consensus estimate of 381K.
Here is a close look at the data since 2005 (with a callout for 2012), 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.
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. I've now added a linear regression through the data. We can see that this metric has started to slip below the long-term trend stretching back to 1968.
For a broader view of unemployment, see the latest update in my monthly series Unemployment and the Market Since 1948.
Source: Advisor Perspectives
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