New Jobless Claims at 298K,
Much Better Than Forecast
The Unemployment Insurance Weekly Claims Report was released this morning for last week. The 298,000 new claims number was a 23,000 decline from the previous week's 321,000 (an upward revision from 316,000). The less volatile and closely watched four-week moving average, which is usually a better indicator of the trend, declined by 10,750 to 322,250.
Here is the opening of the official statement from the Department of Labor:
In the week ending November 30, the advance figure for seasonally adjusted initial claims was 298,000, a decrease of 23,000 from the previous week's revised figure of 321,000. The 4-week moving average was 322,250, a decrease of 10,750 from the previous week's revised average of 333,000.
The advance seasonally adjusted insured unemployment rate was 2.1 percent for the week ending November 23, unchanged from the prior week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending November 23 was 2,744,000, a decrease of 21,000 from the preceding week's revised level of 2,765,000. The 4-week moving average was 2,796,500, a decrease of 32,500 from the preceding week's revised average of 2,829,000.
Today's seasonally adjusted number came in well below the Investing.com forecast of 325K.
Here is a close look at the data over the past few years (with a callout for the past year), 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 secular trends. I've now added a linear regression through the data. We can see that this metric continued 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 annual slope of improvement since the peak in the spring of 2009. This year got off to an excellent start. It then oscillated a bit, stalled for about nine weeks and then headed lower from early July until October. After four reports in the wrong direction (largely resulting from computer upgrades in some states), the trend is clearly on the mend. We are now back to a level previously achieved in September.
For an analysis of unemployment claims as a percent of the labor force, see my recent commentary What Do Weekly Unemployment Claims Tell us About Recession Risk? Here is a snapshot from that analysis.
For a broader view of unemployment, see the latest update in my monthly series Unemployment and the Market Since 1948.