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Did Weekly Unemployment Claims Really Decline?

The Department of Labor reported that the number of Americans seeking unemployment benefits fell last week to the lowest level in five years. This was interpreted as a sign that employers are cutting fewer jobs, and that hiring is likely to pick up. The seasonally-adjusted number of 330k was very misleading. In reality, the actual number of people filing initial claims was 436k. This figure was an increase of 20k above the number of people that filed initial claims in the comparable week one year ago. It was the second week in a row that claims rose year-over-year, which hasn't happened in over two years. For no apparent reason, the Department of Labor increased the divisor they used last year from 144 to 166 to seasonally adjust the number. You divide 436k by 166 to arrive at 330k. This is what led to the perceived decline. We do our best to read beyond the headline, especially when the market refuses to do so.