The Unemployment Insurance Weekly Claims Report was released this morning for last week. The 335,000 new claims number was a 37,000 decrease from a 1,000 upward revision for the previous week. That is the lowest number of initial claims since January of 2008. The less volatile and closely watched four-week moving average, which is usually a better indicator of the recent trend, fell from 366,000 to 359,250. Here is the official statement from the Department of Labor:
In the week ending January 12, the advance figure for seasonally adjusted initial claims was 335,000, a decrease of 37,000 from the previous week's revised figure of 372,000. The 4-week moving average was 359,250, a decrease of 6,750 from the previous week's revised average of 366,000.
The advance seasonally adjusted insured unemployment rate was 2.5 percent for the week ending January 5, an increase of 0.1 percentage point from the prior week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending January 5 was 3,214,000, an increase of 87,000 from the preceding week's revised level of 3,127,000. The 4-week moving average was 3,195,750, a decrease of 6,000 from the preceding week's revised average of 3,201,750.
Today's seasonally adjusted number was way below the Briefing.com consensus estimate of 370K.
The unemployment report footnotes for the previous week's unadjusted data identifies 15 state with a decrease of more than 1,000 layoffs (Michigan at the top, where claims fell by 12,536) and 15 states with an increase of more than 1,000 new claims (New York topping that list with 37,189 new claims).
Here is a close look at the data over the past few years (with a callout for the several months), which gives a clearer sense of the overall trend in relation to the last recession and the trend in recent weeks.
Note: The conspicuous steeple that began in November in the chart above is, of course, the fingerprint of Superstorm Sandy.
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.
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).
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. I've now added a linear regression through the data. We can see that this metric continues to fall below the long-term trend stretching back to 1968.
A Four Year Comparison
Here is an overlay of the past four calendar years and the beginning of 2013 using the 4-week moving average. The purpose is to show the relative slope of improvement since the peak in the spring of 2009. Here, too, we see a clear illustration of the Superstorm rise and fall in the moving average.
(Click to enlarge)
For a broader view of unemployment, see the latest update in my monthly series Unemployment and the Market Since 1948.