The Unemployment Insurance Weekly Claims Report was released this morning for last week. The 350,000 new claims number was a 12,000 decrease from the previous week's 362,000 (previously reported at 358,000). The less volatile and closely watched four-week moving average, which is usually a better indicator of the trend, jumped by 10,750 to 337,500.
The financial press (e.g., Reuters) reports that issues with California's recent computer update continue to skew the numbers as the state deals with backlog accounting.
Here is the opening of the official statement from the Department of Labor:
In the week ending October 19, the advance figure for seasonally adjusted initial claims was 350,000, a decrease of 12,000 from the previous week's revised figure of 362,000. The 4-week moving average was 348,250, an increase of 10,750 from the previous week's revised average of 337,500.
The advance seasonally adjusted insured unemployment rate was 2.2 percent for the week ending October 12, unchanged from the prior week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending October 12 was 2,874,000, a decrease of 8,000 from the preceding week's revised level of 2,882,000. The 4-week moving average was 2,894,750, an increase of 13,250 from the preceding week's revised average of 2,881,500.
Today's seasonally adjusted number came in above the Investing.com forecast of 340K.
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. This year got off to an excellent start. It then oscillated a bit, stalled for about nine weeks and then headed lower from early July until October. The last three reports, however, have clearly been in the wrong direction.
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.