February 2018 Initial Unemployment Claims Rolling Averages Continues To Improve

Hurricanes continue to impact claims taking procedures in the Virgin Islands and Puerto Rico. The market expectations for weekly initial unemployment claims (from Bloomberg/Econoday) were 232 K to 235 K (consensus 235,000), and the Department of Labor reported 221,000 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 234,500 (reported last week as 234,500) to 224,500. The rolling averages generally have been equal to or under 300,000 since August 2014.

Analyst Opinion of Initial Unemployment Claims

This marks 148 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 8.4 % lower (better than the 5.1 % lower 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 3, the advance figure for seasonally adjusted initial claims was 221,000, a decrease of 9,000 from the previous week’s unrevised level of 230,000. The 4-week moving average was 224,500, a decrease of 10,000 from the previous week’s unrevised average of 234,500. This is the lowest level for this average since March 10, 1973 when it was 222,000. Claims taking procedures in Puerto Rico and in the Virgin Islands have still not returned to normal.

The advance seasonally adjusted insured unemployment rate was 1.4 percent for the week ending January 27, unchanged from the previous week’s unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending January 27 was 1,923,000, a decrease of 33,000 from the previous week’s revised level. The previous week’s level was revised up 3,000 from 1,953,000 to 1,956,000. The 4-week moving average was 1,946,000, an increase of 12,500 from the previous week’s revised average. The previous week’s average was revised up by 750 from 1,932,750 to 1,933,500.