February 2017 Initial Unemployment Claims Rolling Average Now At Lowest Level Since 1973

The market expectations for weekly initial unemployment claims (from Bloomberg / Econoday) were 240 K to 250 K (consensus 245,000), and the Department of Labor reported 223,000 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 240,500 (reported last week as 241,000) to 234,250. The rolling averages generally have been equal to or under 300,000 since August 2014.

Analyst Opinion of Initial Unemployment Claims

The trend of the 4 week moving average significantly improved this week. This marks 103 consecutive weeks of initial claims below 300,000, the longest streak since 1970. This is the lowest level for this average since April 14, 1973 when it was 232,750. 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 10.3 % lower (marginally better than the revised 10.0 % 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 February 25, the advance figure for seasonally adjusted initial claims was 223,000, a decrease of 19,000 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 down by 2,000 from 244,000 to 242,000. The 4-week moving average was 234,250, a decrease of 6,250 from the previous week’s revised average. This is the lowest level for this average since April 14, 1973 when it was 232,750. The previous week’s average was revised down by 500 from 241,000 to 240,500. the previous week’s revised average. This is the lowest level for this average since July 21, 1973 when it was 239,500. The previous week’s average was revised down by 250 from 245,250 to 245,000.

The advance seasonally adjusted insured unemployment rate was 1.5 percent for the week ending February 18, unchanged from the previous week’s unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending February 18 was 2,066,000, an increase of 3,000 from the previous week’s revised level. The previous week’s level was revised up 3,000 from 2,060,000 to 2,063,000. The 4-week moving average was 2,071,250, an increase of 750 from the previous week’s revised average. The previous week’s average was revised up by 750 from 2,069,750 to 2,070,500.