The Unemployment Insurance Weekly Claims Report was released this morning for last week. The 374,000 new claims number was a 66,000 increase from the previous week's 308,000. The less volatile and closely watched four-week moving average, which is usually a better indicator of the trend, jumped by 20,000 to 325,000.
Here is the opening of the official statement from the Department of Labor, strikethoughs added by me:
In the week ending October 5, the advance figure for seasonally adjusted initial claims was 374,000, an increase of 66,000 from the previous week's
unrevised figure of 308,000. The 4-week moving average was 325,000, an increase of 20,000 from the previous week's unrevised average of 305,000.
The advance seasonally adjusted insured unemployment rate was 2.2 percent for the week ending September 28, unchanged from the prior week's revised rate. The advance number for seasonally adjusted insured unemployment during the week ending September 28 was 2,905,000, a decrease of 16,000 from the preceding week's revised level of 2,921,000. The 4-week moving average was 2,858,750, an increase of 22,500 from the preceding week's revised average of 2,836,250.
Today's seasonally adjusted number came in much higher than the Investing.com forecast of 310K.
As Bloomberg points out, today's high numbers resulted from a combination of the California computer upgrades and the government shutdown.
More Americans than projected filed applications for unemployment benefits last week as California worked through a backlog caused by a switch in computer systems and the partial federal shutdown forced some government contractors to pare staff.
Here is a close look at the data over the past few years (with a callout for the past year), which gives a clearer sense of the overall trend in relation to the last recession and the trend in recent weeks.
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. Here is the complete data series.
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 secular trends. I've now added a linear regression through the data. We can see that this metric continued to fall below the long-term trend stretching back to 1968, with the past week as an apparent anomaly.
A Four-Year Comparison
Here is an overlay of the past three calendar years and the beginning of 2013 using the 4-week moving average. The purpose is to show the relative annual slope of improvement since the peak in the spring of 2009. The latest year was off to an excellent start. It then oscillated a bit, stalled for about nine weeks, but since the July 9th report, the trend has been in the right direction and accelerating lower. For this update, I rescaled the vertical axis to accommodate the current downward trend.
For an analysis of unemployment claims as a percent of the labor force, see my recent commentary What Do Weekly Unemployment Claims Tell us About Recession Risk? Here is a snapshot from that analysis.
For a broader view of unemployment, see the latest update in my monthly series Unemployment and the Market Since 1948.