December 2018 Initial Unemployment Claims Rolling Average Marginally Improved But Last Weeks Average Was Revised Upward

The market expectations for weekly initial unemployment claims (from Econoday) were 213 K to 220 K (consensus 213,000), 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 219,250 (reported last week as 218,000) to 218,750. The rolling averages generally have been equal to or under 300,000 since August 2014.

Analyst Opinion of Initial Unemployment Claims

This marks 195 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 9.5 % lower (better than the 8.5 % 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 29, the advance figure for seasonally adjusted initial claims was 231,000, an increase of 10,000 from the previous week's revised level. The previous week's level was revised up by 5,000 from 216,000 to 221,000. The 4-week moving average was 218,750, a decrease of 500 from the previous week's revised average. The previous week's average was revised up by 1,250 from 218,000 to 219,250.

The advance seasonally adjusted insured unemployment rate was 1.2 percent for the week ending December 22, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending December 22 was 1,740,000, an increase of 32,000 from the previous week's revised level. The previous week's level was revised up 7,000 from 1,701,000 to 1,708,000. The 4-week moving average was 1,703,500, an increase of 26,000 from the previous week's revised average. The previous week's average was revised up by 1,750 from 1,675,750 to 1,677,500.

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