A Deep Dive Into The Terrible Jobless Claims Number

The Unemployment Insurance Weekly Claims Report was released this morning for last week. Claims rose 43,000 from an upward revision of the previous week to 431,000. That is a 10% increase for the week and a 4-week moving average increase of 5.4%. Here is the official statement from the Department of labour:

In the week ending April 30, the advance figure for seasonally adjusted initial claims was 474,000, an increase of 43,000 from the previous week’s revised figure of 431,000. The 4-week moving average was 431,250, an increase of 22,250 from the previous week’s revised average of 409,000.

The advance seasonally adjusted insured unemployment rate was 3.0 per cent for the week ending April 23, an increase of 0.1 percentage point from the prior week’s unrevised rate of 2.9 per cent.

The advance number for seasonally adjusted insured unemployment during the week ending April 23 was 3,733,000, an increase of 74,000 from the preceding week’s revised level of 3,659,000. The 4-week moving average was 3,700,750, a decrease of 1,250 from the preceding week’s revised average of 3,702,000.

Today’s number was 18.5% above the Briefing.com consensus estimate of 400,000 claims.

As we can see, there’s a good bit of volatility in this indicator, which is why the 4-week moving average (shown in the callouts) is a more useful number than the weekly data.


[credit provider=”Doug Short” url=”http://dshort.com/charts/weekly-unemployment-claims-charts.html?weekly-unemployment-claims”]

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).


[credit provider=”Doug Short” url=”http://dshort.com/charts/weekly-unemployment-claims-charts.html?weekly-unemployment-claims-NSA”]

Because of the extreme volatility of the non-adjusted weekly data, a 52-week moving average gives a better sense of the long-term trends.


[credit provider=”Doug Short” url=”http://dshort.com/charts/indicators/weekly-unemployment-claims-NSA-52-ma.gif”]

The Bureau of labour Statistics provides an overview on seasonal adjustment here (scroll down about half way down). For more specific insight into the adjustment method, check out the BLS Seasonal Adjustment Files and Documentation.

For a broader view of unemployment, see the latest update in my monthly series Unemployment and the Market Since 1948.