May 2019 Initial Unemployment Claims Moving Average Again Worsens

Market expectations for weekly initial unemployment claims (from Econoday) were 213 K to 222 K (consensus 215,000), and the Department of Labor reported 228,000 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 212,500 (reported last week as 212,500) to 220,250. The rolling averages generally have been equal to or under 300,000 since August 2014.

Analyst Opinion of Initial Unemployment Claims

This marks 213 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. The unemployment rate is currently worse than one year ago.

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 2.3 % higher (worse than the 3.1 % 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 May 4, the advance figure for seasonally adjusted initial claims was 228,000, a decrease of 2,000 from the previous week's unrevised level of 230,000. The 4-week moving average was 220,250, an increase of 7,750 from the previous week's unrevised average of 212,500.

The advance seasonally adjusted insured unemployment rate was 1.2 percent for the week ending April 27, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending April 27 was 1,684,000, an increase of 13,000 from the previous week's unrevised level of 1,671,000. The 4-week moving average was 1,665,750, a decrease of 8,000 from the previous week's unrevised average of 1,673,750.