January 2020 Initial Unemployment Claims 4 Week Average Again Improves

Market expectations for weekly initial unemployment claims (from Econoday) were 205 K to 215 K (consensus 213,000), and the Department of Labor reported 211,000 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 216,500 (reported last week as 216,250) to 213,250. The rolling averages generally have been equal to or under 300,000 since August 2014.

Analyst Opinion of Initial Unemployment Claims

This marks 248 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 history suggests a slowing economy.

It should be pointed out that Econintersect watches the year-over-year change in the 4-week moving average. There is always some seasonality that migrates into the seasonally adjusted data, and year-over-year comparisons help remove some seasonality. The four-week rolling average of initial claims is +3.1 % (better than the +3.0 % 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 January 18, the advance figure for seasonally adjusted initial claims was 211,000, an increase of 6,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 204,000 to 205,000. The 4-week moving average was 213,250, a decrease of 3,250 from the previous week's revised average. The previous week's average was revised up by 250 from 216,250 to 216,500.

The advance seasonally adjusted insured unemployment rate was 1.2 percent for the week ending January 11, unchanged from the previous week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending January 11 was 1,731,000, a decrease of 37,000 from the previous week's revised level. The previous week's level was revised up 1,000 from 1,767,000 to 1,768,000. The 4-week moving average was 1,757,750, an increase of 2,000 from the previous week's revised average. The previous week's average was revised up by 250 from 1,755,500 to 1,755,750.

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