December 2018 Initial Unemployment Claims Rolling Average Continues To Worsen

The market expectations for weekly initial unemployment claims (from Econoday) were 220 K to 230 K (consensus 225,000), and the Department of Labor reported 231,000 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 223,750 (reported last week as 223,250) to 228,000. The rolling averages generally have been equal to or under 300,000 since August 2014.

Analyst Opinion of Initial Unemployment Claims

This marks 191 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 historically suggests a slowing economy.

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 helps remove some seasonality. The four week rolling average of initial claims are 5.6 % lower (worse than the 7.8 % 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 December 1, the advance figure for seasonally adjusted initial claims was 231,000, a decrease of 4,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 234,000 to 235,000. The 4-week moving average was 228,000, an increase of 4,250 from the previous week's revised average. The previous week's average was revised up by 500 from 223,250 to 223,750.

The advance seasonally adjusted insured unemployment rate was 1.1 percent for the week ending November 24, a decrease of 0.1 percentage point from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending November 24 was 1,631,000, a decrease of 74,000 from the previous week's revised level. The previous week's level was revised down by 5,000 from 1,710,000 to 1,705,000. The 4-week moving average was 1,667,000, an increase of 250 from the previous week's revised average. The previous week's average was revised down by 1,000 from 1,667,750 to 1,666,750.

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