Weekly Unemployment Claims At 355K Better Than The Consensus 370K

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by: Doug Short

The Unemployment Insurance Weekly Claims Report was released this morning for last week. The 355,000 new claims number was an 8,000 decrease from the previous week. The less volatile and closely watched four-week moving average, which is a better indicator of the recent trend, is at 370,500, up 3,250 from last week. Here is the official statement from the Department of Labor:

In the week ending November 3, the advance figure for seasonally adjusted initial claims was 355,000, a decrease of 8,000 from the previous week's unrevised figure of 363,000. The 4-week moving average was 370,500, an increase of 3,250 from the previous week's unrevised average of 367,250.

The advance seasonally adjusted insured unemployment rate was 2.4 percent for the week ending October 27, a decrease of 0.1 percentage point from the prior week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending October 27 was 3,127,000, a decrease of 135,000 from the preceding week's revised level of 3,262,000. The 4-week moving average was 3,227,750, a decrease of 38,500 from the preceding week's revised average of 3,266,250.

Today's seasonally adjusted number was below the Briefing.com consensus estimate of 370K.

Note: As Bill McBride points out in his Calculated Risk review of today's data, "Due to Hurricane Sandy, we will probably see an increase in initial unemployment claims over the next few weeks. The decline this week is probably because some people in a few states - like New York and New Jersey - were not able to file claims immediately."
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Here is a close look at the data over the past few years (with a callout for 2012), which gives a clearer sense of the overall trend in relation to the last recession and the trend in recent weeks.

In the callout, note the red dots for the past four weeks. These clearly illustrate the data anomaly refrenced above.

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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. )Click to enlarge
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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). )Click to enlarge
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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. )Click to enlarge
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A Four Year Comparison

At the suggestion of Mike Shedlock, of Global Economic Trend Analysis, I've created an overlay of the past four-year calendar years using the 4-week moving average. The purpose is to show the relative slope of improvement since the peak in the spring of 2009.)Click to enlarge
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For a broader view of unemployment, see the latest update in my monthly series Unemployment and the Market Since 1948.