New Jobless Claims Drop To 311K, Beating Expectations

The Unemployment Insurance Weekly Claims Reportwas released this morning for last week. The 311,000 new claims number was a decline of 10,000 from the previous week's 321,000 (revised from 320,000). The less volatile and closely watched four-week moving average, which is usually a better indicator of the trend, also fell 10,000, now at 317,750.

Here is the opening of the official statement from the Department of Labor:

In the week ending March 22, the advance figure for seasonally adjusted initial claims was 311,000, a decrease of 10,000 from the previous week's revised figure of 321,000. The 4-week moving average was 317,750, a decrease of 9,500 from the previous week's revised average of 327,250. 

The advance seasonally adjusted insured unemployment rate was 2.2 percent for the week ending March 15, unchanged from the prior week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending March 15 was 2,823,000, a decrease of 53,000 from the preceding week's revised level of 2,876,000. The 4-week moving average was 2,862,500, a decrease of 31,500 from the preceding week's revised average of 2,894,000.

Today's seasonally adjusted number at 311K came in well below the Investing.com forecast of 325K.

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 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 end of September. It then zigzagged higher to the end of the year. This year (the red series) started off with a decline, then hovered in a narrow range for eight weeks. However, for the last three weeks the trend has headed lower. We are still 12,750 above the September 2013 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.