Unemployment Claims Inch Up From Last Week
Initial jobless claims measures the number of individuals who filed for unemployment insurance for the first time during the past week. In the week ending September 23, initial jobless claims inched up to a seasonally adjusted level of 204,000. This is an increase of 2,000 from the previous week's revised figure of 202,000 and lower than the forecast of 215,000.
Here is the opening statement from the Department of Labor:
In the week ending September 23, the advance figure for seasonally adjusted initial claims was 204,000, an increase of 2,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 201,000 to 202,000. The 4-week moving average was 211,000, a decrease of 6,250 from the previous week's revised average. The previous week's average was revised up by 250 from 217,000 to 217,250.
The chart below is a snapshot of weekly initial unemployment insurance claims for this year.
Here is a closer look at the series since 2007, with a callout to the past 12 months. The four-week moving average, which gives a clearer sense of the overall trend, is currently at 211,000. This is an decrease of 6,250 from the previous week's figure and the lowest level since the beginning of February.
As we can see, there's a good bit of volatility in this indicator, which is why the four-week moving average is a more useful number than the weekly data. Here is the complete data series dating back to 1967.
Outside of the COVID spike, initial unemployment claims have never been greater than 700,000 for a given week. With that said, we've adjusted the y-axis on the chart below so that we can get a zoomed in view of the series where the COVID spike isn't as prominent.
Notice the relationship between recessions and the rise in weekly unemployment claims. The 4-week moving average begins to rise at or before the start of a recession and reaches a relative peak at the end of a recession.
The headline unemployment insurance data is seasonally adjusted, as are the charts above. What does the non-seasonally adjusted data look like? See the chart below, which clearly shows the extreme volatility of the non-adjusted data (the green dots). The four-week MA gives an indication of the recurring pattern of seasonal change (note, for example, those regular January spikes).
Because of the extreme volatility of the non-adjusted weekly data, we can add a 52-week moving average to give a better sense of the secular trends. The chart below also has a linear regression through the data (red line), which we are currently below.
For an analysis of unemployment claims as a percent of the labor force, see this regularly updated piece The Civilian Labor Force, Unemployment Claims and the Business Cycle. Here is a snapshot from that analysis.
This article was originally written by Doug Short. From 2016-2022, it was improved upon and updated by Jill Mislinski. Starting in January 2023, AP Charts pages will be maintained by Jennifer Nash at VettaFi | Advisor Perspectives
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