July 2019 Initial Unemployment Claims Moving Average Improves

Market expectations for weekly initial unemployment claims (from Econoday) were 209 K to 220 K (consensus 216,000), and the Department of Labor reported 209,000 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 222,500 (reported last week as 222,250) to 219,250. The rolling averages generally have been equal to or under 300,000 since August 2014.

Analyst Opinion of Initial Unemployment Claims

This marks 222 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 on the 4-week moving average. There is always some seasonality which migrates into the seasonally adjusted data, and year-over-year comparisons help remove some seasonality. The four-week rolling average of initial claims is 0.7 % higher (better than the 0.1 % lower for 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 July 6, the advance figure for seasonally adjusted initial claims was 209,000, a decrease of 13,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 221,000 to 222,000. The 4-week moving average was 219,250, a decrease of 3,250 from the previous week's revised average. The previous week's average was revised up by 250 from 222,250 to 222,500.

The advance seasonally adjusted insured unemployment rate was 1.2 percent for the week ending June 29, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending June 29 was 1,723,000, an increase of 27,000 from the previous week's revised level. The previous week's level was revised up 10,000 from 1,686,000 to 1,696,000. The 4-week moving average was 1,694,750, an increase of 5,750 from the previous week's revised average. The previous week's average was revised up by 2,500 from 1,686,500 to 1,689,000.