Lowest New Unemployment Claims Since January 2008

The Unemployment Insurance Weekly Claims Report was released this morning for last week. The 324,000 new claims number was a 18,000 decline from the previous week's upwardly revised 342,000. This is the lowest level since January 2008. The less volatile and closely watched four-week moving average, which is usually a better indicator of the recent trend, declined by 16,000 to 342,250. Here is the official statement from the Department of Labor:

In the week ending April 27, the advance figure for seasonally adjusted initial claims was 324,000, a decrease of 18,000 from the previous week's revised figure of 342,000. The 4-week moving average was 342,250, a decrease of 16,000 from the previous week's revised average of 358,250.

The advance seasonally adjusted insured unemployment rate was 2.3 percent for the week ending April 20, unchanged from the prior week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending April 20 was 3,019,000, an increase of 12,000 from the preceding week's revised level of 3,007,000. The 4-week moving average was 3,055,500, a decrease of 18,000 from the preceding week's revised average of 3,073,500.

Today's seasonally adjusted number was below the Briefing.com consensus estimate of 351K.

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.


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 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 three 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. The latest year was off to an excellent start, reversed directions and is now again trending lower.

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.