The Unemployment Insurance Weekly Claims Report was released this morning for last week. The 326,000 new claims number was a 1,000 increase from the previous week's 325,000, a downward revision from 326,000. The less volatile and closely watched four-week moving average, which is usually a better indicator of the trend, fell by 3,750 to 331,500.
Here is the opening of the official statement from the Department of Labor:
In the week ending January 18, the advance figure for seasonally adjusted initial claims was 326,000, an increase of 1,000 from the previous week's revised figure of 325,000. The 4-week moving average was 331,500, a decrease of 3,750 from the previous week's revised average of 335,250.
The advance seasonally adjusted insured unemployment rate was 2.3 percent for the week ending January 11, unchanged from the prior week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending January 11 was 3,056,000, an increase of 34,000 from the preceding week's revised level of 3,022,000. The 4-week moving average was 2,939,000, an increase of 31,000 from the preceding week's revised average of 2,908,000.
Today's seasonally adjusted number was spot on the Investing.com forecast of 326K.
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.
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.
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).
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.
A Four-Year Comparison
Here is an overlay of the past three calendar years and the beginning of 2013 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 first of October. It then oscillated higher to the end of the year. Our current year (the red series) is off to a great start, but the 4-week moving average must continue to fall in order to keep the October 2014 low of 305,000 from being the business cycle trough.
For an analysis of unemployment claims as a percent of the labor force, see my recent commentary What Do Weekly Unemployment Claims Tell us About Recession Risk? Here is a snapshot from that analysis.
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