Weekly New Unemployment Claims at 346K, Slightly Below Forecast

The Unemployment Insurance Weekly Claims Report was released this morning for last week. The 346,000 new claims number was a 11,000 decrease from the previous week's upwardly revised 357,000 (originally 354,000). The less volatile and closely watched four-week moving average, which is usually a better indicator of the recent trend, rose by 4,500 to 352,500. Here is the official statement from the Department of Labor:

In the week ending June 1, the advance figure for seasonally adjusted initial claims was 346,000, a decrease of 11,000 from the previous week's revised figure of 357,000. The 4-week moving average was 352,500, an increase of 4,500 from the previous week's revised average of 348,000.

The advance seasonally adjusted insured unemployment rate was 2.3 percent for the week ending May 25, unchanged from the prior week's unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending May 25 was 2,952,000, a decrease of 52,000 from the preceding week's revised level of 3,004,000. The 4-week moving average was 2,975,750, a decrease of 15,250 from the preceding week's revised average of 2,991,000.

Today's seasonally adjusted number was slightly below the Briefing.com consensus estimate of 348K.

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. It has oscillated a bit and is now above its interim low set four weeks ago.

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.