June 2017 Initial Unemployment Claims Rolling Average Again Marginally Worsens

The market expectations for weekly initial unemployment claims (from Bloomberg/Econoday) were 235 K to 245 K (consensus 241,000), and the Department of Labor reported 245,000 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 239,750 (reported last week as 238,000) to 242,000. 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 worsened this week. This marks 116 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 10.2 % lower (worse than the revised 12.7 % 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 June 3, the advance figure for seasonally adjusted initial claims was 245,000, a decrease of 10,000 from the previous week’s revised level. The previous week’s level was revised up by 7,000 from 248,000 to 255,000. The 4-week moving average was 242,000, an increase of 2,250 from the previous week’s revised average. The previous week’s average was revised up by 1,750 from 238,000 to 239,750.

The advance seasonally adjusted insured unemployment rate was 1.4 percent for the week ending May 27, unchanged from the previous week’s unrevised rate. The advance number for seasonally adjusted insured unemployment during the week ending May 27 was 1,917,000, a decrease of 2,000 from the previous week’s revised level. The previous week’s level was revised up 4,000 from 1,915,000 to 1,919,000. The 4-week moving average was 1,914,750, a decrease of 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 1,000 from 1,914,500 to 1,915,500.