December 2019 Initial Unemployment Claims 4 Week Average Again Worsens

Market expectations for weekly initial unemployment claims (from Econoday) were 215 K to 225 K (consensus 223,000), and the Department of Labor reported 222,000 new claims. The more important (because of the volatility in the weekly reported claims and seasonality errors in adjusting the data) 4 week moving average moved from 225,750 (reported last week as 225,500) to 228,000. The rolling averages generally have been equal to or under 300,000 since August 2014.

Analyst Opinion of Initial Unemployment Claims

This marks 244 consecutive weeks of initial claims below 300,000, the longest streak since 1970. The general trend of the 4-week rolling average is a slowing rate of improvement year-over-year which history suggests a slowing economy.

It should be pointed out that Econintersect watches the year-over-year change in the 4-week moving average. There is always some seasonality that migrates into the seasonally adjusted data, and year-over-year comparisons help remove some seasonality. The four-week rolling average of initial claims is -3.1 % (worse than the -0.7 % last week) than they were in this same week a year ago.

 

Claim levels are at 40-year lows (with the normal range around 350,000 weekly initial unemployment claims of levels seen historically during times of economic expansion - see chart below).

 

From the Department of Labor:

In the week ending December 21, the advance figure for seasonally adjusted initial claims was 222,000, a decrease of 13,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 234,000 to 235,000. The 4-week moving average was 228,000, an increase of 2,250 from the previous week's revised average. The previous week's average was revised up by 250 from 225,500 to 225,750.

The advance seasonally adjusted insured unemployment rate was 1.2 percent for the week ending December 14, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending December 14 was 1,719,000, a decrease of 6,000 from the previous week's revised level. The previous week's level was revised up 3,000 from 1,722,000 to 1,725,000. The 4-week moving average was 1,703,500, an increase of 19,250 from the previous week's revised average. The previous week's average was revised up by 750 from 1,683,500 to 1,684,250.