October 2017 Initial Unemployment Claims Rolling Average Improvement Continues

Hurricanes Irma and Maria impacted this week’s claims taking procedures in the Virgin Islands and Puerto Rico. The market expectations for weekly initial unemployment claims (from Bloomberg/Econoday) were 235 K to 250 K (consensus 240,000), and the Department of Labor reported 222,000 new claims. The more important (because of the volatility in the weekly reported claims and seasonality errors in adjusting the data) 4 week moving average moved from 257,750 (reported last week as 257,500) to 248,250. The rolling averages generally have been equal to or under 300,000 since August 2014.

Analyst Opinion of Initial Unemployment Claims

This marks 134 consecutive weeks of initial claims below 300,000, the longest streak since 1970. The general trend of the 4 week rolling average is a slowing rate of improvement year-over-year which historically suggests a slowing economy.

It should be pointed out that Econintersect watches the year-over-year change on the 4 week moving average. There is always some seasonality which migrates into the seasonally adjusted data, and year-over-year comparisons helps remove some seasonality. The four week rolling average of initial claims are 1.3 % lower (better than the 3.0 % higher for last week) than they were in this same week in 2016.

Claim levels are at 40-year lows (with the normal range around 350,000 weekly initial unemployment claims of levels seen historically during times of economic expansion – see chart below).

From the Department of Labor:

In the week ending October 14, the advance figure for seasonally adjusted initial claims was 222,000, a decrease of 22,000 from the previous week’s revised level. This is the lowest level for initial claims since March 31, 1973 when it was 222,000. The previous week’s level was revised up by 1,000 from 243,000 to 244,000. The 4-week moving average was 248,250, a decrease of 9,500 from the previous week’s revised average. The previous week’s average was revised up by 250 from 257,500 to 257,750. Claims taking procedures continue to be severely disrupted in Puerto Rico and the Virgin Islands as a result of power outages and infrastructure damage caused by Hurricanes Irma and Maria.

The advance seasonally adjusted insured unemployment rate was 1.3 percent for the week ending October 7, a decrease of 0.1 percentage point from the previous week’s revised rate. The previous week’s rate was revised up by 0.1 from 1.3 to 1.4 percent. The advance number for seasonally adjusted insured unemployment during the week ending October 7 was 1,888,000, a decrease of 16,000 from the previous week’s revised level. This is the lowest level for insured unemployment since December 29, 1973 when it was 1,805,000. The previous week’s level was revised up 15,000 from 1,889,000 to 1,904,000. The 4-week moving average was 1,906,000, a decrease of 22,750 from the previous week’s revised average. This is the lowest level for this average since January 12, 1974 when it was 1,881,000. The previous week’s average was revised up by 3,750 from 1,925,000 to 1,928,750.