New Jobless Claims At 326K, Higher Than Forecast

Here is the opening statement from the Department of Labor:

In the week ending May 17, the advance figure for seasonally adjusted initial claims was 326,000, an increase of 28,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 297,000 to 298,000. The 4-week moving average was 322,500, a decrease of 1,000 from the previous week's revised average. The previous week's average was revised up by 250 from 323,250 to 323,500. 

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

Today's seasonally adjusted number at 326K was higher than the Investing.com forecast of 310K.

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. It then zigzagged higher to the end of the year. In 2014 this metric was relatively flat for the first two months, but it has trended lower since the end of February. Six weeks ago, this indicator hit its lowest level since October 6, 2007 -- two months before the start of the last recession. The trend then reversed for three weeks and remained relatively flat. The latest data point is 10,500 above its interim 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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