New Jobless Claims At 304K, Beating Expectations

Here is the opening statement from the Department of Labor:

In the week ending July 5, the advance figure for seasonally adjusted initial claims was 304,000, a decrease of 11,000 from the previous week's unrevised level of 315,000. The 4-week moving average was 311,500, a decrease of 3,500 from the previous week's unrevised average of 315,000. 

There were no special factors impacting this week's initial claims. [See full report]

Today's seasonally adjusted number at 304K was lower than the Investing.com forecast of 315K. The less volatile four-week moving average is now only 1,000 above its nearly seven-year interim low set five weeks ago.

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 volatility in recent months.

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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.

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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).

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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 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.

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A Four-Year Comparison

Here is a calendar-year overlay since 2009 using the 4-week moving average. The purpose is to show the relative annual slopes since the peak in the spring of 2009. Last year (blue line at the bottom) hit a trough at the end of September. After zigzagging higher and lower, it set a new interim low in early April and a slightly lower interim low five weeks ago. The latest number is 1,000 above that low.

For an analysis of unemployment claims as a percent of the labor force, see my recent commentaryWhat Do Weekly Unemployment Claims Tell us About Recession Risk? Here is a snapshot from that analysis.

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For a broader view of unemployment, see the latest update in my monthly series Unemployment and the Market Since 1948.